I know the purpose of this site.  Not sure why you are so confused by "I" since it doesn't matter who the person is making the withdrawal.  Your response uses a lot of pronouns (e.g., "them") that make your response difficult to follow but I don't think your analysis is correct.  The loan doesn't justify a tax free withdrawal from section 529.  The payment of education expenses (whether through a loan or otherwise) justifies the withdrawal from the 529 plan.  I believe on these facts that the following are true:  (1) $30k can be withdrawn from the 529 plan tax-free; (2) the $5k loan isn't a "qualified education loan" within the meaning of section 221(d)(1) and section 529(c)(9); and (3) that $10k could be withdrawn from the 529 plan in later years to repay "qualified education loans" (but not the $5k loan).