When off campus housing costs more than the university's estimate - 529 question

[Anonymous]

I have a question for parents who've gone through this.

Our son will start his junior year in September. We have more than enough money for his tuition, housing, food and books in a 529.

However, his school publishes an estimate of off-campus housing & food at $17,000. According to our investment people, we can't use our 529 money for anything above that $17,000 since he will live off campus next year (there's basically no option to stay on campus for juniors and seniors).

He will be living in an apartment building with two other guys and rent is $16,000 for the year, and a partial meal plan through the school is $4,000, and then there's groceries. This seems absolutely ridiculous to me that we can't use our own 529 money for these reasonable expenses. This is NOT a fancy apartment building at all. He says it is on the low end (costwise) of what they looked at.

Has anyone dealt with this issue and how did you get around it? It seems so insane that because a university is lowballing their housing/food estimates to make their cost seem more reasonable, families can't use their 529 saved money for their kid's housing/food at college.

Thanks!

[Anonymous]

You don’t get around it. You could just pay the tax on the overage. It can’t be that much.

[Anonymous]

You cannot get around it.

[Anonymous]

CPA here - You cannot get around it. What you can do if you're still contributing to the 529 or cash flowing some of the current expenses is to divert current contributions in to a high interest savings account and use that for the overage.

[Anonymous]

Same thing with our college, even the on campus dorm + meal plan is $1500 more than the published rate

[Anonymous]

Anonymous wrote:Same thing with our college, even the on campus dorm + meal plan is $1500 more than the published rate

But if the actual price is on a University bill, does it matter what the "published rate" is?

[Anonymous]

OP here. This is so frustrating. I guess I should have looked into this more and wouldn't have overfunded my kids' college funds by so much. Should have set more aside for the overages. I guess I figured it would pay for the ACTUAL costs of their tuition, room & board, and books. Not some lowballed number by the school to make their $90,000 per year cost look more like $80,000.

[Anonymous]

What school?

[Anonymous]

Anonymous wrote:What school?

Why does it matter? The 529 rules apply to all schools, and all schools go with low figures.

[Anonymous]

It matters because someone should ask the school to revise their housing estimates!

[Anonymous]

Anonymous wrote:OP here. This is so frustrating. I guess I should have looked into this more and wouldn't have overfunded my kids' college funds by so much. Should have set more aside for the overages. I guess I figured it would pay for the ACTUAL costs of their tuition, room & board, and books. Not some lowballed number by the school to make their $90,000 per year cost look more like $80,000.

Literally 99% of folks who have 529 know this. Is this really a big deal OP? I mean now you can convert any leftover 529 into ROTH. Not something you need to get “so frustrated” about

[Anonymous]

Is this in Boston or NYC? Would love the name of the town / city.

[Anonymous]

Anonymous wrote:Is this in Boston or NYC? Would love the name of the town / city.

DP - and my DCs rent alone is more than $17k in the middle of nowhere! Penn State.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. This is so frustrating. I guess I should have looked into this more and wouldn't have overfunded my kids' college funds by so much. Should have set more aside for the overages. I guess I figured it would pay for the ACTUAL costs of their tuition, room & board, and books. Not some lowballed number by the school to make their $90,000 per year cost look more like $80,000.

Literally 99% of folks who have 529 know this. Is this really a big deal OP? I mean now you can convert any leftover 529 into ROTH. Not something you need to get “so frustrated” about

This ^ not sure why so much drama. Plus if you are paying attention - city rental rates have been insane for a while. Schools go with middle estimates for their figures. You can do your own research to get a sense what the cost will be and plan accordingly. Our financial advisors was upfront about this with us as we got close to using our 529.

[Anonymous]

Anonymous wrote:It matters because someone should ask the school to revise their housing estimates!

Except it’s not an estimate. It’s the actual cost of on campus room and board. Schools aren’t going to start charging on Campus students more just so off campus kids can get more rent money out of their 529s.