Sponsors (2)
The bill makes travel and parking costs for students and apprentices an allowable use of 529 funds—improving affordability and access to in-person education and training—while risking diversion of savings away from tuition, creating uneven benefits across institutions, and producing a small federal revenue loss.
Students, parents/families, and apprentices can use 529 account distributions to pay reasonable transportation and parking costs (including travel for eligible apprenticeship programs), reducing out-of-pocket travel expenses and lowering barriers to in-person attendance and workforce training.
Schools and administrators have an administrable limit because allowable transportation withdrawals are tied to each institution's cost-of-attendance transportation allowance, which helps prevent excessive or unclear withdrawals.
Parents and students who withdraw 529 funds for transportation may have less saved for tuition, fees, and other education costs later—potentially increasing future out-of-pocket tuition payments for families who exhaust accounts on travel.
Students at institutions that set low cost-of-attendance transportation allowances could receive less benefit, producing uneven access and disproportionately disadvantaging low-income students or those at certain schools.
Expanding qualified uses of tax-advantaged 529 accounts for transportation modestly reduces future tax-preferred savings for tuition and creates a small fiscal cost through foregone tax revenue for taxpayers.
Based on analysis of 2 sections of legislative text.
Allows 529 plan distributions to cover reasonable transportation expenses (including parking) up to the institution’s cost-of-attendance transportation allowance.
Introduced May 23, 2025 by Jennifer McClellan · Last progress May 23, 2025
Expands tax-advantaged 529 plan qualified distributions to cover reasonable transportation costs (including parking) for attendance at eligible colleges, universities, and qualified apprenticeship programs. The allowance is limited by the transportation component of each institution’s cost-of-attendance, as set by the institution in effect on enactment, and applies to distributions made after enactment.