529 Plans

Can You Use a 529 Plan for a Coding Bootcamp?

Learn how you can utilize one of the most popular savings accounts to help pay for a coding bootcamp. Jumpstart your career with a Sootchy 529 plan.

May 12, 2021
Sootchy Team
Can You Use a 529 Plan for a Coding Bootcamp?

529 plans are excellent savings tools to help people pay for education. Many people get education from different types of programs and schools. Coding bootcamps are growing in popularity, but it isn’t always obvious if 529 plans can help with paying for programs like coding bootcamp.

Fortunately, 529 plans can be applied to many coding bootcamps, but only if the coding bootcamp is offered at an eligible institution. How do I find out if the institution is eligible? Easy. The Department of Education keeps a list of the roughly 400 colleges and universities that accept 529 plans.

Still not sure about whether or not using a 529 plan for a coding bootcamp is right for you? Well let’s get a bit more in-depth! We can help you set up and manage your 529 plan.

What Exactly Is a 529 Plan?

The Securities and Exchange Commission defines a 529 plan as “a tax-advantaged” plan formulated to help with saving for education in the future. In other words, a 529 plan, known legally as a “qualified tuition plan,” allows for tax-free growth and tax-free withdrawals provided the funds are used to pay for qualified education expenses. Qualified education expenses include tuition, books, room, and board.

But here is something else to consider: there are two types of 529 plans. A “prepaid tuition plan” allows you to pay for future tuition at eligible colleges and universities, while an “education savings plan” is an investment account that can be used to pay for those qualified education expenses. The good news is that every state in the U.S. accepts and sponsors at least one type of 529 plan.

Limitations on Using 529 Plans

529 plans sound great, but there are some rules and regulations you must consider. First, the money from a 529 plan must be used for qualified higher education expenses only. That means tuition, books, and supplies. You may be eligible to receive 529 tax benefits for room and board if you are enrolled at least half-time at an institution. If funds from a 529 plan are used to pay for anything other than qualified higher education expenses, the account holder is hit with a 10% penalty in addition to the normal taxes paid on income.

529 plans can also be affected when used in conjunction with other education tax credits, including the American Opportunity Tax Credit and the Lifetime Learning Credit. Always subtract those tax credits from college expenses first before dipping into your 529 plan.

Are Coding Bootcamps Eligible Education Institutions for 529 Plans?

Similar to trade schools, coding boot camps are short, rigorous programs that train students in digital marketing, data science, full-stack web development, and UX/UI Design. The Course Report, the definitive guide to coding bootcamps, found the average bootcamper to have 6 years of professional experience, possess a bachelor’s degree, and to have never worked as a programmer. In short, you don’t have to be a computer wiz to attend a bootcamp for coding. Coding Bootcamps are perfect for those who want to learn in-demand programming languages such as the following:

• Java

• Python


• .Net

• Ruby On Rails

• Full-Stack Javascript

The Course Report showed that 79 percent of graduates found jobs that required skills they learned in bootcamp. Additionally, graduates saw a 56 percent increase in salary after attending bootcamp. That works out to an average starting salary of nearly $70,000.

Yet, does the return justify the investment? You may be asking yourself how much one of these camps actually costs to attend? The Course Report reveals that the average tuition cost of a coding bootcamp is around $14,000. And with continued growth forecast in the tech industry, this number will look small compared to the salary you could be raking in after graduating!

How to Use a 529 Plan to Pay for Coding Bootcamp?

There are three ways in which you can actually pay for coding bootcamp with a 529 plan. The funds can be disbursed to the account holder, the beneficiary, or the eligible institution. The easiest way to pay is to simply notify the company that manages the 529 and have them write a check to the institution.

Yet, some institutions prefer to use a debit system particularly if a student is living off-campus. This means providing the college or university with bank accounts and routing numbers to process tuition payments. In this case, you would need to withdraw money from your 529 plan ahead of time to ensure that you have the funds necessary for payment. Alternatively, if you have the funds, you can pay and then reimburse yourself with the 529 – just make sure to have a record of payment.

Checklist for Using a 529 Plan to Afford Coding Bootcamp

Here is a definitive list of things to keep in mind when using a 529 plan to pay for coding bootcamp.

• Which educational expenses qualify? Tuition, books, supplies, room, and board.

• Travel expenses are not covered by a 529!

• Always check to make sure that your institution is eligible for 529 plans.

• Student status matters! You must be enrolled at least half-time to be eligible for room and board 529 tax benefits.

• Figure out how you will pay the institution for tuition: disbursement or debit.

• Keep your record of tuition payments accurate and organized for tax purposes.

• Always deduct other tax credits from education expenses before using your 529.

Contact Sootchy for Help Paying for Coding Bootcamp with a 529 Plan

Offering in-demand technical skills in a growing industry, coding bootcamps represent an opportunity to increase your job prospects and salary. A 529 plan is a flexible way to pay for post-secondary education, whether it be through prepaid tuition or education savings. Visit Sootchy online or download our mobile app to learn more about using a 529 plan for your coding bootcamp costs.



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