In the News: Paying for a Summer Studying Abroad
As a recent – and I use the word recent liberally – college graduate, one of my few regrets is that I didn’t take advantage of the opportunity to spend a summer studying abroad. I generally excuse this away because I had my hands full juggling my course work and extracurricular activities and was always eager to return to my native New York. If I was being honest with myself, the real reason was that I could never seem to navigate the financial and administrative aspects of applying to take classes overseas during the summer.
For those of you who are still in school and seeking to broaden your horizons, Michael Eisenberg, a Los Angeles-based CPA/PFS, recently spoke to U.S. News & World Report to educate their audience on how to pay for short study-abroad trips.
The article encourages students to look for scholarships and aid to pay for the parts of a short-term educational trip not eligible for 529 plan funding.
While students taking an international course offered by their college can easily find out the full cost of attendance, not all of these costs are allowed expenses for 529 withdrawals, says Eisenberg,
Housing and food costs on a weeklong side trip the student decided to take – a trip that isn't directly education related – could not, for example, be covered by 529 plan funds.
Eisenberg shares the following three tips for families who will use some 529 plan funds for short-term or summer study-abroad programs:
- Withdraw 529 plan funds for tuition and textbooks: Costs associated with overseas trips offered by U.S. universities are subject to the rules of the Internal Revenue Service when it comes to qualified educational expenses. Tuition and textbooks are always qualified expenses, provided the student is at least a half-time student and attending an IRS-designated eligible educational institution.
- Apply for study abroad scholarships: Study abroad scholarships can pay for short-term overseas studies or fill in the gap from what can't be withdrawn from a 529 plan, Eisenberg says. Parents may be surprised at how much funding is available for these experiences.
- Plan for ineligible expenses: Families shouldn't withdraw funds for health care, currency or transportation expenses from 529 plan accounts, Eisenberg says. However, they should estimate those costs.
Parents and students need to evaluate each associated cost to determine both what can be withdrawn and what experiences they're willing to pay for.
And if you are taking classes abroad this summer, Bon Voyage!
James Schiavone, AICPA Staff.