"didn't pay them" = the School expenses referred to in that sentence.

"The loan doesn't justify a tax free withdrawal from section 529." Because 529 use is based on Expense; not Borrowing. Better stated: the justification for the withdrawal has been made. Taking a Loan is for whatever use you want, which can even be more school costs. But not for the same school costs as justified the 529 withdrawal. You know it isn't paid for twice.

"I know the purpose of this site."

It's in support of Intuit's Programs used by paid tax preparers. Are you using Lacerte, ProSeries or ProConnect? Or, just seeking tax advice? Because it is not for personal tax advice. You've only posted in this Peer User Community about 529 plans and student support and loans. You don't seem to have any issues using your Intuit Tax Preparation programs or how tax law changes might affect your clients or your practice? Because that is the purpose of this site.