IRA withdrawal for education with student loan at the same time

[lh93]

I wouldn't normally consider this but, I want to increase the liquidity of my assets during this time of uncertainty. 

I'm in grad school and have already taken out student loans for my qualified education expenses. I also have an IRA and I know that I can withdraw without penalty to pay for qualified education expenses. 

Can I withdraw from my IRA to cover qualified expenses, even though I've already taken the student loan money?

[SusanY1]

You can, but you will still pay tax on the withdrawal, even though you may be exempt from the early withdrawal penalty for a portion of the fees that were not paid for by scholarships or grants.  (Student loans are disregarded in this scenario.) 

If you do make withdrawals, you may wish to limit them to the amount absolutely necessary to avoid increasing your tax bill for funds that you do not immediately require.  Most IRA withdrawals can be processed in a few days so the funds are already part of your liquid assets. Take care not to decrease your overall liquidity in the future by the amount of unnecessary taxes due.