Repay student loans from Bright Start 529 plan?

My son quit college and is now going into the military. I want to use his bright start money to help him pay off his student loan. Does that qualify as a qualified withdraw under the higher education act or would I be taxed to pay for his student loan?

Terry Says:  I’m going to have to disappoint you!  According to www.savingforcollege.com, the very best place for information on 529 college savings plans, the IRS does not allow you to use withdrawals from a 529 plan to pay off student loans– even though the loan itself paid for qualified college expenses.

But there is a small consolation.  When you withdraw the money to pay off his loan, only the portion that is earnings on your original 529 investment will be subject to income taxes and the 10 percent penalty for withdrawing for other than a qualified education payment.