Can You Use a 529 Plan to Pay for Coding Bootcamp?
529 plan funds can be used to pay for a coding bootcamp, but only if the coding bootcamp is provided through an eligible college or university. 529 plan distributions used to pay for a coding bootcamp offered through a private company are considered non-qualified, and subject to ordinary income tax and a 10% penalty on the earnings portion of the distribution. Any state income tax benefits previously claimed may also be subject to recapture.
But, there are other ways to pay for coding bootcamp, including scholarships, private student loans, income share agreements and deferred tuition plans.
What is a coding bootcamp?
A coding bootcamp is an intense short-term technical training program that teaches fundamental coding skills needed for a programming job. According to Course Report, a technology education research site, the number of students who graduated from a coding bootcamp has grown 11 times since the programs began in 2013.
Students typically attend coding bootcamps as an alternative to or to supplement a 4-year Bachelor’s degree program in Computer Science. Common coding languages taught at coding bootcamps include:
- Ruby on Rails
Coding bootcamps are offered as in-person programs or online courses. In-person programs generally take about 15 weeks on average to complete, and the typical online program takes about 24 weeks to complete.
How much does a coding bootcamp cost?
Data from Course Report shows the average total cost of an in-person coding bootcamp program is $13,584 per student and the average cost of an online coding bootcamp is $12,900. For most students, this is a much cheaper option than a bachelor’s degree. According to CollegeCalc, the average total cost of an out-of-state 4-year degree in Computer Science is $167,968, not counting financial aid or other discounts.
The average starting salary for a coding bootcamp graduate was $64,529 in 2018, according to Course Report.
Using a 529 plan to pay for coding bootcamp
Students can use a 529 plan to pay for a coding bootcamp if the tuition and fees are paid to an eligible institution. An eligible institution for 529 plan purposes is a college or university that is eligible for Title IV federal student aid. The eligible institution must be accredited, have a signed program participation agreement with the U.S. Department of Education and meet other requirements concerning financial aid and administrative capacity.
For a coding bootcamp offered at an eligible college or university, qualified 529 plan expenses may include:
- Computer Software
- Internet Access
- Books and supplies
- Student Loans
Most coding camps are offered through private companies that are not eligible institutions. Therefore, students cannot use 529 plan funds to pay for tuition or other qualified expenses. However, some universities offer coding bootcamps, either internally or with an outside partner company. Some programs offer college credit, and some offer a certificate of completion from the college.
Other ways to pay for coding bootcamp
Coding bootcamps can be expensive, and students may need help covering the costs. Some common ways to pay for coding bootcamp include:
- Deferred tuition program – Students pay a small deposit (or nothing at all) upfront and start making payments after graduation.
- Income share agreement– The borrower agrees to pay the college or university a percentage of their salary for a specified number of years after graduation.
- Personal loans – Coding bootcamp loans for students are available through personal loan lenders, such as local banks and credit unions.
- Scholarships – There are many coding bootcamp scholarships available, especially for women and veterans.
- Lifetime Learning Tax Credit – Eligible students or parents may claim an annual tax credit of up to $2,000 for tuition, fees, books, supplies and equipment required for a degree program or a course that helps acquire or improve job skills at an eligible college or university.
- American Opportunity Tax Credit (AOTC) – Eligible parents may claim an annual tax credit of up to $2,500 for tuition and related expenses. Students must be enrolled on at least a half-time basis and pursuing a degree or certificate program leading to a recognized education credential at an eligible college or university
A good place to start