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38Packard writes (in part):

It seems to me, that if she can get loans that do not accumulate interest until after she leaves college, and we can get 5% on the 529, then it makes sense to use 25% of the 529 each year and borrow the remainder each of the four years.

I reply:

I think that your premise is mistaken. Unless things have changed since I went to college, interest accrues on the loan from the outset. She won't have to start repayment until after graduation, but interest will accrue. Since she will almost certainly pay substantially more than 5% interest, the wealth-maximizing strategy appears to be to spend down the 529 plan first. --Bob
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