Q. Will they be able to use the 529 money to pay back the 14,770 that was paid for using the government loan?
A. A 529 plan can be used to pay off student loans (a recent law change). But there is a $10,000 lifetime limit for doing so. You are better off allocating expenses directly to the 529 distribution and saving the loan reimbursement for later (when you no longer have any actual expenses).
Q. Will they be able to use the 529 money to pay back the 14,770 that was paid for using the government loan? This payment went directly to the school. I've seen other posts of similar situations where the student is able to reimburse themselves, you have called it a tax loophole.
A. Yes, you can effectively reimburse yourself. But, the 529 plan to be qualified (tax free) you have "to say" you used that distribution to pay qualified expenses (or you actually made a student loan payment).
This was explained at your other post.
https://ttlc.intuit.com/community/college-education/discussion/re-can-i-get-reimburse-from-529-for-s...
