<p>We have a 529 for S with a smallish amount of money in it (~12,000). He has received the Presidential Scholarship. My thought is that we can pull out $3000 or so per year and apply it towards housing costs. Is it as simple as this or do we need to take into account the tuition tax credit somehow? (He has an additional $3000/year in scholarship over and above the Presidential.) We just want to make sure we are covering ‘qualified expenses’ so we don’t get hit with a penalty.</p>
<p>After researching this a bit, I’ve decided I need to meet with an accountant. It’s all rather complicated especially when you figure in the Lifelong Learning Credit and the ‘taxable’ vs ‘non-taxable’ use of the scholarship funds.</p>
<p>Let us know what you finally decide. We are in the same boat and we plan to use all of it by the end of the school year and close out the account. Since we are not using it for tuition, it doesn’t really have the benefit that it was designed for. We are grateful that we have it to use for the current cost of room and board, though!</p>
<p>My child also has a presidential scholarship. We understand that “qualified expenses” can be withdrawn to equal the school’s COA. There are some other interesting items that can be paid for like a computer to use at school. In addition, I remember reading that if the child receives a scholarship the amount equal to that scholarship can be withdrawn without penalty. I guess the thought behind that is you have to start saving long before your darling child displays scholarship potential thus voiding the need for said college savings and one shouldn’t be penalized for having a child who is smart/talented.</p>