What Happens to College Savings If My Child Doesn’t Go to College?

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Kristen Kuchar

By Kristen Kuchar

September 1, 2020

“But what happens to my 529 plan if my child doesn’t go to college? Or gets a scholarship?”

This is a common question among parents who are hesitant about investing their hard-earned money into a 529 college savings plan. Unfortunately, it’s a misconception that the money is totally lost if the designated beneficiary decides not to go to college

Here is what you can do with your college savings if your child doesn’t attend college:

Non-traditional career options

More students are considering taking an alternative route to a postsecondary education. A 529 plan covers costs of trade schools, also known as vocational schools or career colleges, not just 4-year colleges and universities. These schools train you to become an electrician, chef, plumber, real estate agent, dental hygienist, radiologic technician, and more. 

Community Colleges

You can use a 529 college savings plan to pay for community college. Attending a community college can mean completing a two-year degree program for yourself or your child, completing a certificate program or taking courses for career advancement.

Graduate School

If a child receives a scholarship for their undergraduate education, you can use the 529 to pay for graduate school, if more education is in the plan. Or if your child doesn’t go to college at all, you can also use the money in the plan to attend graduate school yourself.

Student Loans

If you still have student loans from your own college education, you can use the money in a 529 plan to make student loan payments.

Change the Beneficiary

You can always change the beneficiary to another qualifying family member, such as another child, who is planning on attending college or one of the options from above.


It may seem an eternity away, but you can opt to save the funds for a future grandchild.

Your own education

You can use the money in a 529 plan for your own education. This includes completing a degree or simply classes to help learn new skills and build your resume

You can take a non-qualified withdrawal at any time for any reason

Only the earnings portion of the distribution will incur taxes and penalty. Your contributions (the principal) will never be taxed or penalized since they were made with after-tax dollars. 

A good place to start:

See the best 529 plans, personalized for you