Students may use a 529 plan to pay for dual enrollment tuition and fees at an eligible institution. However, 529 plan distributions used to pay for other dual enrollment expenses, such as books and supplies, are considered non-qualified. The earnings portion of a non-qualified 529 plan distribution is subject to income tax and a 10% penalty, and any state tax benefits claimed may be subject to recapture. 

A Coverdell Education Savings Account (ESA) may be used to pay for dual enrollment tuition, fees, books, supplies and equipment.  A Coverdell ESA may also be used to pay for special needs services for a special needs beneficiary who is taking dual enrollment classes. 

What are dual enrollment classes?

Dual enrollment classes, or dual credit classes, are college-level classes taken by high school students that count for high school and college credit. 

Unlike AP classes, students do not need to pass an exam to get college credit from a dual enrollment class. To earn college credit, dual enrollment students typically have to pass the class with a C or better. Dual enrollment classes are generally taken at a community college or online.

Requirements for dual enrollment classes vary by state. Most states only allow high school sophomores or juniors to take dual enrollment classes, and some states require students to have a minimum GPA to participate.

Students who complete dual enrollment classes generally take fewer classes in college and save money on total college costs. Dual enrollment classes may also allow students to graduate and enter the workforce sooner than a traditional path would allow. However, not all colleges accept dual enrollment credit. Students should check with their school counselor to determine whether or not dual enrollment credits will be accepted by the colleges to which they are applying.

How much do dual enrollment classes cost?

Costs of dual enrollment classes range from $0 to $400, according to Education Week, and are typically covered by the college, parents and students, high school districts or the states. 

The number of students taking advantage of dual enrollment classes is on the rise. According to the National Center for Education Statistics, there were 813,000 high school students taking dual enrollment classes during the 2002-03 academic year, and that number jumped to 1.4 million students during the 2010-11 academic year. Many local, state and federal politicians support the idea of taking dual enrollment classes to bring down college costs.

Paying for dual enrollment expenses with a 529 plan

A 529 plan may be used to pay for dual enrollment tuition and fees, but a 529 plan cannot be used to pay for books, supplies, room and board or other dual enrollment expenses.

Most qualified 529 plan higher education expenses must be required for enrollment or attendance at an eligible college. High school students taking dual enrollment classes are not enrolled in college, but tuition and fees are required for attendance. Books and supplies are typically only required for students who are enrolled, so they are not considered qualified dual enrollment expenses.

Paying for dual enrollment expenses with a Coverdell ESA

A Coverdell ESA is a tax-advantaged account designed to save for college and K-12 expenses. Coverdell ESAs offer similar federal tax benefits as 529 plans, but with more restrictions, including income limits, age limits and contribution limits. Coverdell ESAs can be used to pay for K-12 expenses beyond tuition, including dual enrollment expenses. 

Qualified Coverdell ESA expenses include a broad range of K-12 expenses incurred in connection with enrollment or attendance at an eligible elementary or secondary school, including:

  • Tuition and fees
  • Books, supplies and equipment
  • Academic tutoring
  • Special needs services for a special needs beneficiary

Families who want to use a 529 plan to pay for dual enrollment expenses may choose to pay for dual enrollment tuition and fees with a 529 plan, and cover costs of books and supplies with a Coverdell ESA. 529 plan to Coverdell ESA rollovers are not permitted. 529 plan distributions used to fund a Coverdell ESA are considered non-qualified.