If a family has three kids with student loan debt, for example, they could withdraw $10,000 in tax-free funds for each child from their 529 plans for a total of $30,000. However, that may not be the case since interest paid from the 529 for student loan debt isn’t tax deductible under the student loan interest debt provisions. When It Could Make Sense To Use A 529 For Student LoansOne scenario where it could make a lot of sense for families to consider using a 529 plan to help pay off student loan debt applies in a niche scenario. The Bottom LineShould you take advantage of new federal rules that let you use 529 college savings plans to pay down student loan debt? Just because you can use 529 funds to pay off $10,000 in student loan debt doesn’t mean you should.

Source: Forbes February 03, 2020 13:30 UTC