How can I use a 529 (college payment plan) to make payments to a student account?
No USC employee is authorized to advise you regarding tax questions.
Please contact a tax professional if you have any questions.
In general, a 529 Plan is an education savings plan operated by a state or
educational institution designed to help families set aside funds for future college costs.
It is named after Section 529 of the Internal Revenue Code
which created these types of savings plans in 1998.
529 Plans can be used to meet costs of qualified colleges nationwide.
In most plans, your choice of school is not affected by what state your 529 savings plan is from.
However, you should check with your 529 plan to see if there are any state or
other restrictions which would prevent payments to USC.
529 payment transactions will be listed as "Personal Check Payment - Thank You".
Please note that it is very likely that payments from your 529 plan (ie: checks) must be made payable directly to USC.
To avoid late fees and penalties, you should contact your 529 Plan administrator to find out how much additional time they will require to insure that we will receive your payment in time. There are currently eight states who require that USC invoice them before payment will be sent: Alabama, Florida, Illinois, Michigan, Nevada, South Carolina, Texas, and Virginia. For students with 529 plans from these states, the payments are applied after the add/drop date since payment is based on the number of units a student is enrolled in, in which case applicable late fees / finance charges will be waived by the Agency Billing department.
Please note that electronic transfer payments may also take longer than expected, ie: plans that specify 3 business days have taken 7 or more days to get to our bank.
Taxes and Tax Implications
Parents and other individuals who receive 'reimbursements' of payments from a 529 plan may find that the reimbursements have become taxable income. If you have any questions, please contact a tax professional. No USC employee is authorized to advise you regarding tax questions.
For more information about 529 plans or the Qualified Tuition Program, you may also go to the IRS' website at: http://www.irs.gov/. For additional information, refer to Chapter 8 of Publication 970, Tax Benefits for Education.
Note about taxes and 529 plans: The 1098-T is a statement of qualified tuition and fees charged by USC that we are required to provide to the student and to the IRS each year. Since the 1098-T is intended to assist you in calculating your eligibility for a Hope Scholarship or Lifetime Learning Credit, "qualified charges" for this purpose are defined more narrowly than they are for other programs such as 529 plans. In general, qualified tuition and related expenses for the 1098-T are tuition and fees required for enrollment and do not include items such as room and board.
Categories: e.Pay (USCe.pay), Parents, Guests, and Sponsors, Payments