Latest / The College Savings Podcast with Fexingo: 529 Plans, Education Funding, and Student Costs / How 529 Plans Cover Your Childs Culinary School Tuition
Transcript
- Lucas: So, Luna, we've covered a lot of ground on 529 plans — law school, coding bootcamps, even wilderness therapy. But here's one I don't think we've touched: culinary school. Luna: Culinary school — like, for future chefs? I love it. What's the angle? Lucas: Right — specifically, how 529 funds can cover tuition at places like the Culinary Institute of America, or CIA as it's known. The CIA is a degree-granting institution, so it qualifies. But there are nuances. Luna: And speaking of things that qualify — I know our listeners appreciate when we keep this podcast ad-free and focused. If our money conversations have helped you think about your child's education differently, you can support the show at buy me a coffee dot com slash fexingo. It really helps us stay independent. Lucas: Absolutely. No pressure, but every bit helps us keep bringing these deep dives. So, back to culinary school — what qualifies as a 'qualified higher education expense' at a place like the CIA? Luna: Tuition, obviously. But what about things like chef knives, uniforms, or textbooks specific to pastry arts? Lucas: Great question. The IRS says fees, books, supplies, and equipment required for enrollment or attendance are qualified. So, yes — that $800 set of Wusthof chef knives is covered, as long as the school requires it. Same for chef coats and non-slip shoes. Luna: What about room and board? CIA has campuses in Hyde Park and Napa Valley — both expensive areas. Lucas: Room and board is covered, but only if the student is enrolled at least half-time. And the amount is limited to the school's official cost of attendance. For the CIA, that was about $16,000 for room and board last year — so a 529 can cover that. Luna: What if the program is shorter — like a six-month certificate rather than a two-year associate degree? Lucas: Good point. The key is that the school must be eligible to participate in federal student aid programs. Most legitimate culinary schools, including Le Cordon Bleu's North American campuses before they closed, were eligible. But you need to check. The school's federal school code is a quick way to verify. Luna: So, a 529 can pay for a culinary certificate at an accredited school. That's huge for people who want to pivot careers. Lucas: Exactly. And here's a specific number: the CIA's associate degree in culinary arts costs about $35,000 per year in tuition alone. A 529 can cover that fully, tax-free. Compare that to a four-year public university at around $10,000 per year — culinary school is actually pricier. Luna: Right, so you'd need to plan contributions accordingly. The annual gift tax exclusion is $18,000 per donor per beneficiary — so two parents could put $36,000 into a 529 for a future chef each year. Lucas: And if grandparents want to contribute, same rule applies. But there's a catch with financial aid — 529 accounts owned by grandparents can affect need-based aid differently. That's a topic for another episode. Luna: Focus on culinary. What about study abroad? The CIA has a program in France for pastry arts. Lucas: Study abroad is covered, as long as it's part of the curriculum at the home school. So if a CIA student spends a semester in Paris learning croissants, the tuition and room and board paid to the CIA are qualified. But if they pay a separate French school directly, that's trickier — the foreign school must be eligible for U.S. federal aid. Luna: So, stick with programs administered by the home school. Got it. Lucas: Exactly. Also, note that 529 funds can cover computers and software — but only if the school requires them. For culinary students, that might be a tablet for recipes and inventory software. Not a general-purpose laptop. Luna: What about transportation? Getting to and from the CIA's Hyde Park campus isn't cheap. Lucas: Transportation is not a qualified expense for 529 plans. That's a common misconception. So, no deduction for flights to Napa or gas to Poughkeepsie. Luna: Good to clarify. Any other gotchas? Lucas: One big one: if your child decides not to pursue culinary after all, you can change the beneficiary to another family member — including yourself. Or you can withdraw the money, but you'll pay taxes and a 10% penalty on the earnings. Luna: But if they do go to culinary school, it's a solid use of 529 funds. I'm thinking about the ROI — what's the starting salary for a line cook? Lucas: Median around $30,000, according to the Bureau of Labor Statistics. That's lower than a typical college grad. So it's important to weigh the cost. But for someone passionate about cooking, a 529 can make that path debt-free. Luna: And you can use 529 funds for apprenticeship programs too — we covered that in an earlier episode. So if your child does a paid apprenticeship at a Michelin-starred restaurant, the 529 could cover related equipment. Lucas: Right — but only if the apprenticeship is registered with the Department of Labor. That's a specific requirement. Luna: So, bottom line: 529 plans are incredibly flexible for culinary education, but you need to check school eligibility and equipment requirements. Lucas: Exactly. And plan contributions early, because culinary school isn't cheap. If you're starting from birth, $200 a month in a 529 could grow to over $80,000 by age 18, assuming a 6% return. That could cover most of a CIA degree. Luna: That's a powerful number. Any final tips? Lucas: Keep receipts for all qualified expenses — especially equipment. If the IRS ever asks, you need to prove the school required those chef knives. Luna: And check with your plan administrator — some state 529s have additional rules. But overall, this is a fantastic option for aspiring chefs. Lucas: Agreed. Next time, maybe we'll tackle how 529s cover film school — lights, camera, tuition. Luna: I'd watch that episode. For now, that's our take on culinary school and 529 plans.