Navigating the Restart of Student Loan Payments: Options, Shock, and Credit Impact
Borrowers with outstanding federal student debt may be able to use any remaining funds in their 529 college savings plan to pay down up to $10,000 of what they owe, thanks to a law passed in 2019. This option may be particularly appealing as federal student loan payments are set to restart in October. While most college students with student debt won't have money left in their 529 plans, those with siblings who have remaining funds may be able to change the account's beneficiary and use it to pay off some or all of their debt. Additionally, parents can potentially pay off their Parent Plus loans by changing the beneficiary of a 529 plan. However, borrowers should consider comparing their loan interest rates with the earnings in their investment account before withdrawing from the 529 plan.
