Janet Kottman could potentially spend more than $3,000 on supplies for her daughter's first year studying for a career in the medical field. The exact amount depends on whether her daughter chooses to study radiology, general diagnostic medical sonography, dental hygiene, or practical nursing. Dental hygiene has the highest costs, totaling more than $3,000. Radiology students need less than $400 in supplies.
"Tools and supply expenses are often an overlooked expense in the saving for college process," says Kottman, a Upromise Investments Inc. senior institutional relationship manager for Missouri's direct 529 college savings plan. Some parents know to save for tuition and textbooks in 529 plans, tax-advantaged investment accounts for postsecondary education.
However, in programs ranging from automotive technician training at community colleges and technical schools to master's level medical programs, tools are major expenses, she says.
[See five steps for utilizing 529 plan funds.]
Follow these tips to estimate and reduce costs for educational programs requiring purchases of expensive equipment, as well as to calculate withdrawal amounts from 529 plans.
1. Find equipment estimates on school websites: School websites' financial aid offices post cost of attendance estimates online, including estimates for tools and supplies. These estimates aren't exact, largely because students have purchasing options beyond the school bookstore, Kottman notes. For instance, medical scrubs are also available from uniform shops.
During the application stage, parents and students should use these estimates to compare costs among different programs. After choosing a program, an exact supply list is needed, she says.
[Use the financial aid shopping sheet to understand college costs.]
2. Get the required tools list: A few months before schooling begins, students should request complete lists of supplies from the academic department or individual professors teaching first year courses, Kottman says. If contacting professors, confirm with academic counselors that the tool list is the same no matter which professor teaches the class, experts advise.
Don't forget to ask if there are any restrictions that might limit product selection, she says. For instance, is new or branded equipment required? Are there manuals specifically for student use that come with the tool? Do scrubs need to be a certain style or color to identify students working in a hospital environment?
3. Be wary of extravagantly priced products: While a $250 pair of riding boots may look spiffier than the $150 required version estimated in the cost of attendance for a horse training program, using 529 plan withdrawals to pay for the more expensive boots could result in an audit, says Gregg Wind, a certified public accountant in Los Angeles. He notes that 529 plans have restrictions on how families can allocate distributions.
"Sometimes the IRS will fall back on the 'ordinary and necessary' (section 162) theory, essentially that expenses considered ordinary and necessary for a particular situation are deductible, while those considered 'extravagant' are not," Wind says. "Parents should err on the side of caution and not purchase the most expensive supplies and equipment," unless required by the educational institution, he adds.
[Learn more about paying for college.]
4. Compare prices: Determine rules for buying new or used supplies. For instance, Kottman won't buy used scrubs for her daughter because they're relatively inexpensive; a top and bottom set starts at under $20. However, she'll consider used tools from a company that verifies sterilization and good, working condition of tools.
Next, compare prices. The selection depends on the career training program. For instance, tools for an automotive mechanic may be bought from hardware or automotive repair retailers, tool shops, and websites, experts note. Medical equipment may be bought from a variety of online outlets, as well as medical supply retailers.