Can I Use 529 Funds to Pay for Unbound?
The short answer is yes, but the long answer includes a bit of critical fine print, so keep reading.

Introduction
In this article we will explain how you can use funds from your 529 Savings Plan to pay for your Unbound tuition at both the high school and post-high school levels. Everything in this article is based on current research done by our team and the feedback we have received from families who have successfully used their 529 Savings Plans to fund their student’s Unbound education. We will also include additional resources to explore, specifically the ones we used as references for the information in this article.
Before we get into it: this article along with any communication you receive from Unbound regarding 529 funds either on the phone or by text or email is not legal, financial, or investing advice. You should consult your financial advisor, tax attorney, CPA, or 529 plan administrator if you have questions related to your own plan.
Let’s dive in…

An Overview of How 529 Savings Plans Work
Important disclaimer ahead:

There are two basic kinds of 529 Plans: prepaid tuition plans and savings plans. Each state has its own unique plan, though they are permitted to offer both types. Qualified education institutions, however, can only offer the prepaid tuition type 529 plan. This article is strictly covering the 529 Savings Plan, not the 529 Prepaid Tuition Plan.
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A 529 Savings Plan is a tax-advantaged investment account designed to help families save for education expenses, both during the K-12 years and beyond.
A common misconception about 529 savings plans is that the funds can only be used to pay for “qualified education expenses.”
But that’s not accurate.

While it is true you may incur penalty fees and additional taxes if you use the funds for “non-qualified education expenses,” it is an option.
And because that option exists, it means ultimately, it is completely up to you how you choose to use your 529 savings plan funds.
For families who have a 529 plan but are choosing not to pursue a traditional post-high school education path, taking distributions for “non-qualified education expenses” may be the perfect way to ensure you are still able to take advantage of the savings that you have been prioritizing for your student all these years, even if you lose a portion of them to taxes and fees.

An important note on the kinds of funds that exist inside a 529 savings plan and what kind of access you have to them:
The balance in your 529 consists of two types of dollars – the basis (or the total amount you’ve paid into the plan) and the earnings (the total gain you’ve accumulated above and beyond your basis). Each plan distribution consists of an earnings portion and a basis portion. Because contributions towards the basis are made with after-tax dollars, that portion of your plan distribution will never be taxed or penalized, whether it’s part of a distribution going towards “qualified” or “non-qualified” expenses. However, you may not take a basis-only 529 plan withdrawal. What this means is that if you do consider using your funds towards “non-qualified education expenses” the taxes and fees you accrue will only be on the earning portion of your distributions.
To confirm these details for your specific 529 Savings Plan, please consult your financial advisor, tax attorney, CPA, or 529 plan administrator.
How to Use 529 Funds for Post-High School Education Through the Ascend Program

For high school graduates pursuing enrollment in the Ascend program, whether for college credit or not, Unbound tuition is not considered a “Qualified Education Expense.” If you or your accountant try to find us on the list of qualified institutions for 529 funds, you won’t. This is because Unbound is not an accredited institution, even though our Ascend program does include options for students to earn college credit. Here’s a quick explanation on the distinction between the two:
At the post-high school level in Ascend, Unbound works with different colleges and universities for both accreditation of our own courses and to offer additional accredited general education and elective classes to those of our students who elect to pursue a degree. All credits earned through Ascend are highly transferrable and planned out student-by-student based on each student’s unique degree plan that is built and mapped to their target university of choice according to that university’s transfer policies.

Ultimately, if you use any of the earnings portion of your 529 plan to cover Unbound tuition for Ascend enrollment, it may be subject to ordinary income taxes and a 10% penalty.
Can you withdraw the funds and use them to pay for your Ascend enrollment?
Yes.
Are you likely to pay taxes and fees on the earnings portion of your distributions that you would not have otherwise paid had you used the funds for traditional higher education tuition?
Yes.
For students who are still trying to decide between a traditional college experience and a program like Ascend, these implications are worth careful consideration. However, if you have already decided that the traditional higher education environment is not a good fit and you have no intention of enrolling directly into college, you can still utilize the funds you have saved in your 529 plan to pay for your continuing education expenses.

As we said at the beginning, consult your financial advisor, tax attorney, CPA, or 529 plan administrator if you have questions about accessing your funds to pay for a “non-qualifying education expense” like the Ascend program.
Don’t forget – if you enroll in Ascend as a degree-seeking student, after 1-3 years in the program earning up to 30 credits per year towards your degree, you will matriculate to your target university, either on-campus or online, to complete any remaining credits and graduate.
At that time, your 529 funds can be applied directly to your target university tuition, assuming it is an accredited institution, which will be considered a “qualified education expense.” Again, consult your financial advisor, tax attorney, CPA, or 529 plan administrator for confirmation based on your unique situation, any specific state laws, etc.
How to Use 529 Funds for High School Education Through the Equip, Explore, and Ascend Programs

For high school students in 9th-12th grade pursuing elective high school credit through Equip or Explore or pursuing dual enrollment through Ascend, Unbound tuition should be considered a “Qualified Education Expense.”
“Previously, funds from a 529 plan were limited for use toward qualified higher education expenses, including college tuition, fees, books and other supplies. Now, funds can be used for K-12 private schools, although notably only K-12 tuition expenses are eligible, and only up to an annual limit of $10,000. . . Not all states have conformed to these federal updates. States may need to revise their laws to align with the new eligible expenses and higher cap. Check with your state’s plan administrator for the latest guidance. Keep in mind that state laws may change at any time. We will continue monitoring this and keep the list as up-to-date as possible. For the most up-to-date information, see our 529 comparison tool.”
Thus, if your student is in high school and you’re considering Equip or Explore, you should be able to cover the registration costs for their enrollment with funds from their 529 plan without incurring income taxes or penalties on the earnings portion of your distributions.
If your student is in high school and at least 16 years old, they are also eligible for dual enrollment in Ascend, paid for with 529 funds. While Ascend tuition costs are not considered a “Qualified Education Expense” for continuing education post-high school, if your student begins the program in high school, you should be able to cover the first year or two of tuition with penalty and tax-free funds from their 529 plan.

But, just because we cannot overstate this enough, consult your financial advisor, tax attorney, CPA, or 529 plan administrator for more information, confirmation based on your unique situation, state of residence, and next steps for withdrawing funds from your account for either K-12 qualifying expenses or post-high school non-qualifying expenses.
Final Thoughts
Ultimately, how you use your 529 funds is completely up to you, even though in some cases a portion of your distributions may be subject to taxes and fees. Don’t let the terms “Qualified Education Expense” vs “Non-Qualified Education Expense” scare you away from considering non-traditional post-high school training and education for your student.

Do your research, consult with your advisor, and then make the best decision you can based on your student’s goals and educational needs.
Additional Resources
529 plans can seem complicated and hard to understand. The good news is that there’s a lot of information available that can give you clarity and help you make the right decision for your student. Here are a few additional resources we would recommend looking into along with all the sources each linked article references:
- A Penalty-Free Way To Get 529 Money Back by Investopedia
- Can I Withdraw Contributions from a 529 Plan Without Penalty? by Saving For College
- Can You Use 529 Plans for K-12 Tuition? by TIAA

Ellie Smith is the VP of Sales and Operations for Unbound. She is a homeschool and Unbound graduate with a degree in Communications from Thomas Edison State University. In 2017 and 2018, she served on the Unbound National Student Cabinet as the Director of Sales and Marketing. In 2019, she traveled to Ecuador with Unbound’s mission team.
When Ellie isn’t working with our awesome students, she’s probably reading too many books at once, working on a graphic design or hand lettering project, or napping. Because naps are awesome. Her favorite meals are street tacos, popcorn, and coffee.