Sponsors (204)
This bill broadens 529 plan uses to make apprenticeships and industry credentials more affordable and support workforce readiness, while risking reduced college-directed savings, added administrative complexity, and a potentially regressive tax benefit.
Students, workers, and account beneficiaries can use 529 savings to pay for industry credentials, apprenticeships, testing, and continuing-education fees, lowering out-of-pocket costs for job-focused training and making short-term workforce credentials more affordable.
Expands workforce-training pathways by permitting tax-advantaged savings to fund apprenticeships and industry credentials, supporting job readiness and helping small businesses access a better-trained labor pool.
Students and families may have less tax-preferred savings available for traditional college degrees if 529 funds are redirected to short-term credentials and certifications.
The change could primarily benefit higher-income families who already save in 529 plans, creating a regressive tax advantage unless paired with targeted measures for lower-income learners.
Expanding permitted uses increases complexity for plan administrators and the IRS, raising compliance costs and the potential for confusion or errors about which expenses are eligible.
Based on analysis of 2 sections of legislative text.
Allows 529 plan withdrawals to pay qualified postsecondary credentialing expenses (tuition, materials, testing, continuing ed) for recognized credential programs.
Introduced February 7, 2025 by Robert J. Wittman · Last progress February 7, 2025
Allows 529 college savings plans to pay for a broader set of workforce credentials by adding "qualified postsecondary credentialing expenses" to the definition of qualified higher education expenses. That includes tuition, fees, books, required equipment, testing fees, and continuing-education fees for programs and credentials that meet several defined pathways for recognition. Defines which credential programs and credentials qualify (state WIOA lists, VA WEAMS listings, reputable credentialing organizations or those identified after interagency consultation, registered apprenticeships, and state/federal licenses) and applies to 529 distributions made after the law takes effect.