Assume dependent student has $30k in tuition and related fees and room and board for the year.  Assume the entire $30k would qualify for a nontaxable withdrawal from a 529 account.  If the student borrows $5k in student loans and the parents pay the remaining $25k from their bank account, how much can parents withdraw from 529 account for the year to reimburse themselves?  It would seem that the entire $30k can be withdrawn from the 529 account tax-free BUT the loan would not qualify for the student loan interest deduction and the remaining 529 funds could not be used (later in time) to repay the $5k loan.  In essence, it seems that the "student loan" isn't a student loan anymore but just a regular loan.  See, for example, IRC section 221(d)(2).  Thoughts?