Up To $10,000 Student Loans, Tuition Can Be Paid Under South Carolina’s 529 College Savings Plan

Up to $10,000 in student loans and tuition can be paid under South Carolina’s 529 college savings plan. These one-time payments to the beneficiary’s loans can also be for any individual.

529 College Savings Plan [Photo: 529 Planning]

An article in Future Scholar says that the contributions to South Carolina’s 529 college savings plan can be deducted from the state taxable income. In addition, the account withdrawals can include investment gains that will not be taxed if used for eligible expenses. Initially, the eligible expenses only include the costs of higher education. Fortunately, the federal rules were changed in 2018.

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Changes in Federal Rules

According to Slade, in 2018, federal rules were changed which allowed beneficiaries to spend up to $10,000 each on elementary, secondary, or K-12 expenses per year. These changes also included up to $10,000 in student loans and costs of registered apprenticeship programs as eligible expenses. These payments, however, will not be available every year. They can only be availed once for any individual. In the case of an overfunded 529 account, up to $10,000 each can still be used for the student loans of the beneficiary’s siblings. Lastly, the new rules also offer the possibility to save $700 upon paying up to $10,000 in student loans.

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