529 Plan options?

[Thom H.]

Here's a 529 plan question for the tax gurus...

I setup a 529 college savings plan for my youngest years ago. She now is in college and earned a full scholarship, so she doesn't need the 529 plan funds for her undergrad expenses. She recently decided to get an off campus apartment with a room-mate, and works part time to make her half of the rent payment. So, finally to the question... Can the 529 plan fund her off campus apartment rent payments? If so, this would free her earned cash up to save for a down payment on RE. Essentially, providing her a means for swapping the 529 plan money out of the fund (without penalties) so she can invest her earned income. I haven't called my CPA yet due to the holidays, just thought I'd ask for opinions before I call and ask tomorrow. If not, no biggie, she can always wait and use the 529 plan for grad school.