If you didn't save in advance for kids' college and need to pay out of pocket, would you run it through a 529 that year in the form of a contribution and then immediate expenditure?

This seems like everyone should do it but I don't hear about this happening? Is that because a lot of out of pocket is funded by student loans instead?

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That might work if you can deduct 529 contributions on your state taxes (doesn’t qualify for federal deduction.) You should check with CPA.

Otherwise I don’t this there’s any benefit to this other than a teensy bit of tax-free growth you get while the money is in 529.

The downside to this approach, if you’re trying to qualify for financial aid, is the full amount of that cash will count against you, whereas only a small fraction of 529 assets are counted against you for FAFSA.

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My state's credit/deduction is on the net contribution so if you put in the same or lesser amount than used you get no benefit.

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