09/15/2020 | Press release | Distributed by Public on 09/15/2020 07:39
A higher education takes many forms. Ohio's 529 Plan, CollegeAdvantage, can be used for whatever comes after high school, including four-year universities and colleges, two-year community colleges, trade and specialty schools, certificate programs, graduate school, law school, medical school, and now, apprenticeships.
With the 2019 passage of the SECURE (Setting Every Community Up for Retirement Enhancement) Act, apprenticeships were added as another post-secondary education option/choice for which you can use your 529 plan.
Qualified costs for apprenticeships - such as fees, textbooks, supplies, and equipment like required trade tools - now can be paid with 529 distributions. The apprenticeship program must be registered with the Secretary of Labor's National Apprenticeships Act in order to use a 529 plan withdrawal. Interested parties can check the U.S. Labor Department's search tool to confirm that a program is registered, and therefore, eligible for a 529 withdrawal.
What is an apprenticeship?
An apprenticeship is paid, hands-on training in a skilled profession, which is usually started after graduating from high school, though there are some pro-apprenticeship options in the K-12 system. The employer or trade union will pay a student during the apprenticeship, which usually lasts between three to five years as they receive hands-on training. At the end of their apprenticeship, the student will receive a nationally recognized industry credential, which accompanies them wherever their career path might lead.
As a student is receiving real-world training, there may be some costs involved, which are usually the tools of the trade. If you have been saving in a 529 plan, you can take a withdrawal from your account to pay for the tools and more. Again, the apprenticeship must be registered with the U.S. Labor Department in order to keep your withdrawal tax-free.
Another advantage is that students could already have a full-time job lined up after completing their apprenticeship. Most organizations want to hold onto the skilled workers, who have been trained under their tutelage, especially for in-demand fields.
The State of Ohio wants to help interested students find the perfect apprenticeship opportunity for them. Apprentice.ohio.gov shows the multitude of career occupations apprenticeships available throughout Ohio.
If your child is still interested in earning an associate's degree, there are apprenticeship programs in Ohio where participant earn credits towards an associates of technical studies degree. The Ohio Department of Higher Education's Apprenticeship Pathways Initiative has linked apprenticeship programs with local two-year community colleges so participants can also earn a technical associate's degree. Some of the trades cooperating in this program include electrical, sheet metal, carpentry as well as plumbers and pipefitters. Recent apprenticeship expansion grants have also dramatically increased the number of available apprenticeship programs on community college campuses around Ohio. These new programs are also built into a technical Associate's Degree.
How is trade school different from an apprenticeship?
Trade schools are an opportunity for students to learn an in-demand profession and/or technical skills that end up leading to a national or state-level industry recognized credential. These programs can last anywhere from a few months to a year and a half and are geared toward getting students into the workforce as quick as possible. On average, a registered apprenticeship program requires 2,000 - 8,000 hours of on the job training. It also requires at least 144 hours for every 2,000 hours of on-the-job training. Students attending trades schools will also have to pay for their own tuition at the vocational program. Your student may also have to search for a job in their chosen profession after they complete their education at the trade school.
In Ohio, there is a robust network of trade schools, under the Ohio Department of Higher Education (ODHE), known as Ohio Technical Centers (OTCs). According to the ODHE website, 'OTCs provide post-secondary career and technical education (CTE) through 54 career centers across Ohio. These institutions offer programming in the skill trades (i.e., HVAC, phlebotomy, police training, EMT, etc.) that prepare learners for certificates, industry-recognized certifications, and state licensures. OTCs are also part of the State of Ohio's Career-Technical Credit Transfer (CT)2 that aligns educational programs at OTCs to degrees at community colleges and universities. Many of the OTCs are positioned to respond quickly to the needs of business and industry by providing customize trainings and business consultation services to companies in order to assist with meeting Ohio's workforce goals.'
The next generation
Generation Z - the students born between 1995 and 2010 -are looking at all options available for education after high school, including trade and specialty schools, and apprenticeships.
Many in Generation Z are opting to do an apprenticeship or attend schools specializing in career and technical education. Currently, 25% of all high school students in Ohio will graduate having taken at least one career-technical course. This is reversing a decades-long trend toward a traditional four-year college education. Why are apprenticeships and trade schools gaining in popularity? Students want to reduce their need for student loans, while securing a full-time position in industries that need new workers entering that field. Due to close connections to professional trades, students opting to gain professional skill through an apprenticeship or earn a technical education may have a full-time, well-paying job already lined up once they finish in their respective trainings.
No matter if your child wants to immediately start their career with an apprenticeship or go to a trade school, your Ohio 529 Plan will cover qualified costs on either path. If the apprenticeship is registered with the U.S. Department of Labor, you can use your tax-free 529 withdrawal to pay for fees, books, and required supplies. If your child would like to attend a trade school, see if the vocational program has a Federal School Code on the Free Application for Federal Student Aid (FAFSA). As long as the school accepts federal aid, then you can use your 529 funds there.
Posted on September 15, 2020
Ohio Tuition Trust Authority