Sponsors (17)
The bill makes 529 accounts more flexible for workforce credentials and military-related credentials—lowering barriers to upskilling—while increasing the risk that accounts will be depleted sooner and taxpayers may subsidize low-value training instead of traditional degrees.
Students, workers, and families can use 529 funds to pay for recognized credential programs, testing, apprenticeships, and continuing-education fees, making postsecondary training and workforce upskilling more affordable through tax-advantaged savings.
Veterans and active service members can use 529 funds for credentials listed in VA WEAMS and DoD COOL, aligning education savings with military training and credentialing pathways.
Parents and students may have less money available for traditional college degrees because allowing recurring testing and continuing-education expenses can deplete 529 accounts faster and divert savings from degree-focused beneficiaries.
Taxpayers and students face a risk that broadly defined eligible programs or Secretary discretion could let 529 funds subsidize low-value, nontransferable, or short-term credentials with limited long-term benefit.
Account holders (families and beneficiaries) may face increased complexity and uncertainty in planning and managing 529 savings because expanded allowable uses make it harder to predict how to allocate funds for degree versus credential paths.
Based on analysis of 2 sections of legislative text.
Official title: Amend the Internal Revenue Code of 1986 to treat certain postsecondary credentialing expenses as qualified higher education expenses for purposes of 529 accounts.
Introduced February 26, 2025 by Amy Klobuchar · Last progress February 26, 2025
Expands tax-advantaged 529 education savings plans to allow withdrawals to pay for certain postsecondary credentialing expenses. The change defines which credential programs and credentials qualify (including industry credentials, registered apprenticeship certificates, state/federal licenses, and credentials on specified federal or state lists) and lists allowable costs such as tuition, fees, books, required testing, and required continuing-education fees. The amendment applies to distributions made after enactment.
Permits 529 plan distributions to pay for qualifying postsecondary credentialing expenses (tuition, fees, books, required exams, and required continuing education) for recognized credential programs.