Paying For College For Dummies
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Education expenses that qualify for Coverdell College Savings Plans are those expenses that you’re required to pay if your student enrolls at an eligible school. Eligible schools include all public, private, or religious schools that provide either primary or secondary education as determined under their applicable state laws.

  • Qualified expenses for elementary and secondary education: In addition to tuition and mandatory fees, other elementary and secondary education expenses may be eligible for payment using Coverdell distributions.

    • Books, supplies, and equipment related to enrollment: Amounts that you spend for pens and pencils, notebooks, erasers, and the like are included here along with textbooks and any other required reading material that’s not supplied by the school district.

    • Academic tutoring related to enrollment: The math or science tutor (or a dance instructor if your child is a dancer attending a school for the performing arts) is covered here.

    • Special-needs services for students with special needs or disabilities: If your student needs a one-on-one aide with him and the school doesn’t cover the expense, this service qualifies, as does special equipment necessary to accommodate him.

    • Room and board, but only if a requirement of attending that particular school: If you send your child to a boarding school 300 miles from your home, room and board would be required; if you live in the next town, this expense may be questionable.

    • Uniforms, when required by the school: The cost of voluntary school uniform programs doesn’t constitute a qualified educational expense, nor does the annual cost of buying your child school clothes.

    • Transportation, when required by the school: The expense of driving your student to and from school every day doesn’t qualify, but the price you’re charged for the mandatory school bus does.

    • Supplementary items and services, including extended day programs: If your child attends an after-school program or an extended day program at his or her school, you may choose to pay these costs from your Coverdell account.

    • Computers, printers, other peripherals, Internet access, software, and so on: To the extent that you can document that the use of this equipment benefits your student’s education, even if you may be the primary user of this equipment, you may pay for it with a Coverdell distribution.

  • Qualified expenses for higher education: When your student reaches college, qualified expense change. The higher education rules fall in line with those for Section 529 plans.

    • Tuition and mandatory fees at eligible educational institutions: For a school to qualify, it needs to be able to participate (but doesn’t have to) in federal financial aid programs administered by the Department of Education.

    • Required books, supplies, and equipment: Textbooks, laboratory equipment, and any required computer equipment (including peripherals) qualify.

    • Room and board expenses: These expenses are qualified only if they’re paid directly to the school and your student is attending class at least half time or they don’t exceed the amount the school budgets for these expenses, provided your designated beneficiary is at least a half-time student.

    • Expenses for special-needs services that are required for special-needs students: The regulations in this area haven’t been finalized, so use your common sense. Don’t include orthopedic shoes for your flat-footed student, or contact lenses. It’s a safe bet that these aren’t covered under the regulations.

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