529 plan to pay interest on loans?

Paying for College
1

<p>I have a large sum of money that becomes available to me upon retirement. I will not need this money when I retire. My current plan is to use this money to pay any outstanding loans my D or I have incurred to pay for school. I want to know if I can use 529 money to pay the interest on student or plus loans even after my D has completed all of her education. This will be to bridge the gap until I retire and can take the lump sum.</p>

<p>I plan to pay for the first 2 or 3 years out of pocket and either take a new mortgage or other loan to pay for school through my D earning a graduate degree. That takes me to 56 or 57- I plan to retire between 62-65 so I would like to use the 529 funds to pay for the loans for between 5-9 years.</p>

<p>Is it allowable to use 529 funds this way?</p>

2

<p>You wish.
A reference source is, savingforcollege.com . Of course reading the prospectus of your state's program will also describe what are qualified withdrawals; cost of attendence. </p>

<p>You can use the 529 money for the next generation. ie fund your daughter's children college education. That would be a real gift- another 20-30 years of compounding.</p>

3

<p>Only $2500 of student loan interest is tax deductible, so be careful what you do. Best to use 529 $ for principal payments, and those can be spread out for many years after graduation. If you have Perkins or subsidized Stafford Loans, don't make any payments at all until after graduation.</p>