My daughter starts college in the fall. I have money in a 529 plan to pay for it. Does it make more sense to take out a student loan and then pay it off when she graduates? Student loans don’t incur interest until after graduation, correct? If her 529 plan continues to grow and is more than the student loan upon graduation I can transfer the remaining to my other daughter.

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I believe you need to withdraw from the 529 in the same year as the qualified expenses. I also believe there is a limit on the amount of 529 that can be used for student loans, maybe 10k.

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Also there are 2 types of student loans: subsidized and unsubsidized, and depending what you pick that's when your interest starts accruing.

https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized

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There are some student loans that don’t accrue interest until graduation and there are others that accrue interest starting from when you take it out so I’d be careful with that.

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Just use the 529 money.

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Interesting. Same situation here as well. My theory is 529 would grow faster than the interest rate on the loan, so you're making more to keep money in 529 vs using it to pay tuition.

Maybe you can make her work some while in college and then there will be some left over for your other daughter.

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