Can You Still Use a 529 Plan to Pay Student Loans During the Shutdown? Here’s What to Know
- Author: Wilbert Raynor
- Posted: 2025-11-05
Even with the government shutdown, 529 college savings plans remain active — allowing families to pay off student loans, support apprenticeships, and save for education.
These tax-advantaged accounts are one of the few benefits unaffected by the current funding pause.
Government shutdown is here, find out which benefits and assistance programs remain active today!
Using a 529 Plan for Student Loans
Under the SECURE Act of 2019, you can use up to $10,000 per beneficiary from a 529 plan to pay qualified student loans. Each sibling can also receive an additional $10,000.
Withdrawals for principal and interest are tax-free, but you can’t claim a student loan interest deduction on those same payments.
Flexible Options for Families
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Reallocate funds to another child without penalties.
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Use leftover savings to pay student loans or cover future education costs.
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Grandparent-owned accounts can delay withdrawals until after the student’s sophomore year to avoid affecting FAFSA aid.
529 Plans and Apprenticeships
You can also use 529 funds to cover registered apprenticeship programs that include tuition, fees, books, and required tools.
These programs, approved by the U.S. Department of Labor, are available in fields such as construction, healthcare, and IT.
New Benefits Under SECURE 2.0
Starting in 2024, you can roll over up to $35,000 from a 529 plan into a Roth IRA, tax- and penalty-free, as long as the account has been open for at least 15 years.
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