Quote:
Originally Posted by disneysteve
I think the issue is that some parents want to put conditions on paying for college, like you have to maintain a B average for us to pay, or something like that. Since you have to pay the bill first, this would mean the student could borrow the money and then the parents could repay the loan with the 529 funds once the grades were known for the semester.
If the required grade average wasn't achieved, the parents could take out the money from the 529 (since there were qualified expenses) but then keep the money for themselves, leaving the student to repay the loan.
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I don't think that scenario would fit in the rules. Quite simply, the money would never go to college expenses then.
BUT, definitely seems like a bit of a grey area, and one I don't see much guidance on.