Use of Funds

When the account beneficiary is ready for college your Bright Directions account can be used for a wide range of qualified expenses at eligible institutions.

What are Federal Qualified Higher Education Expenses?

Assets in your Account can be used to pay for the Beneficiary’s Federal Qualified Higher Education Expenses, which include:

  • Tuition, fees, books, supplies, and equipment required for enrollment or attendance of a Beneficiary at an Institution of Higher Education;

  • Room and board expenses (with certain limitations) incurred by students who are enrolled at least half-time;

  • Computer equipment, software, and Internet access and related services used primarily by the Beneficiary while enrolled;

  • Special needs services in the case of a special needs Beneficiary which are incurred in connection with such enrollment or attendance;

  • Apprenticeship Program Costs, including tuition, fees, books, supplies, and equipment required for participation;

  • Qualified Education Loan repayments for the Beneficiary or their sibling, subject to a lifetime limit of $10,000 per individual;

  • Qualified Elementary and Secondary Expenses1 (K-12) in connection with the Beneficiary’s enrollment or attendance at an elementary or secondary public, private or religious school, subject to an annual $10,000 (for 2025; $20,000 after 2025) per Beneficiary limit; and

  • Qualified Postsecondary Credentialing Expenses2 such as tuition, testing fees, and materials for approved credential programs.

What are Illinois Qualified Expenses?

Illinois Qualified Expenses includes:

  • Tuition, fees, books, supplies, and equipment required for enrollment or attendance of a Beneficiary at an Institution of Higher Education;

  • Room and board expenses (with certain limitations) incurred by students who are enrolled at least half-time;

  • Computer equipment, software, and Internet access and related services used primarily by the Beneficiary while enrolled;

  • Special needs services in the case of a special needs Beneficiary which are incurred in connection with such enrollment or attendance;

  • Apprenticeship Program Costs, including tuition, fees, books, supplies, and equipment required for participation; and

  • Qualified Education Loan repayments for the Beneficiary or their sibling, subject to a lifetime limit of $10,000 per individual.

Illinois Qualified Expenses* do not include:

  • distributions for Qualified Elementary and Secondary Expenses1; and

  • distributions for Qualified Postsecondary Credentialing Expenses.2

*If a withdrawal is made for such purposes, it may be a Federal Qualified Withdrawal and not included in income for federal and Illinois purposes, but if an Illinois tax deduction was previously claimed for Contributions to the Account all or part of that deduction may be added back to income for Illinois income tax purposes. Please consult with your tax advisor.

Definition of Eligible Educational Institutions

An eligible educational institution is defined by the IRS as any college, university, vocational school, or other postsecondary institution eligible to participate in a student aid program administered by the U.S. Department of Education. This includes a wide range of institutions both within the United States and abroad. Contact the financial aid office to verify whether an institution qualifies or visit the FAFSA website to complete a search for eligible schools.

Payment Options

Bright Directions offers flexibility when it’s time to use the funds, including:

  • Electronic Funds Transfer to the account owner or beneficiary’s bank account

  • Electronic payment to a participating college

  • Check to the account owner

  • Check to the beneficiary

  • Check to a college

  • Bright Directions Campus Cash prepaid card (Coming Soon)

Plan ahead. It’s beneficial to establish your bank account as a recipient of withdrawals in advance of any payment deadlines.

Payment Options

Bright Directions offers flexibility when it’s time to use the funds, including:

  • Electronic Funds Transfer to the account owner or beneficiary’s bank account

  • Electronic payment to a participating college

  • Check to the account owner

  • Check to the beneficiary

  • Check to a college

Plan ahead. It’s beneficial to establish your bank account as a recipient of withdrawals in advance of any payment deadlines.

Coordination of 529 Withdrawals with other Tax Benefits

Review IRS Publication 970 “Tax Benefits for Education” for important information on the coordination of withdrawals from your account with the American Opportunity Credit, Lifetime Learning Credit, and Scholarships and Grants.

Changing Beneficiaries

One of the flexible features of 529 plans is the ability to change the beneficiary. If the designated beneficiary does not need the funds, they can be transferred to another member of the beneficiary’s family, including siblings, parents, aunts, uncles, and first cousins.

You should consult with your financial, tax, or other advisor regarding your individual situation.

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