When our child was a preschooler my wife and I set up 529 and ESA funds. However, that was limited because the public schools in our area are badly overcrowded, somewhat dangerous, and do not provide good instruction according to ratings; thus we put our money into sending our child to private school. Now they are finishing high school, where we pay about 60% of full tuition with financial aid covering the remainder. Fortunately, they have done well in school - in the top 10% of their class and scoring in the 93rd percentile on their college admission test.

We have submitted applications to a number of colleges and universities. Also, we have applied for financial aid from all of them, as we feel we can't pay more for college than we're paying for high school. Most of the schools we applied to have accepted our child for admission. Final college financial aid offers have not been made yet (due to FAFSA delays). However, preliminary offers have been received from some universities that utilize financial information from another financial form. These offers are all falling far short of what we hoped - these schools expect us to pay over double what we're paying for high school.

If none of the schools offer more financial aid, the gap between what we pay for high school and the amount we're expected to pay is larger than all our 529 and ESA money. Thus we could put all those funds toward the first year of college expenses. Is this permitted? Would doing so increase our financial need in future years, potentially leading to more financial aid? Are there possible pitfalls?

1 Answer 1


Having not received an answer here, nor finding one through continued web searches, I eventually consulted with a professional financial advisor. They said that there is not a limit on what percentage of ESA and 529 money can be spent in any one year of college. It is legal to spend all of such funds in one or two years of college, even if the student is in a four or five year program.

While the following is not a direct answer to the question, it may be noteworthy to some that the advisor emphasized that the money must be used on qualified expenses, such as tuition and books. However, according to the IRS, room & board and transportation are not qualified expenses (amongst other things).

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