Let me just preface by pointing to the disclosure below my signature: I cannot provide advice, what I can do is provide information to help you make a more informed decision. So, disclosures aside, there are a few things you might consider:
Loan risk exposure - Who is taking out the loans? Are you taking them, or are they going to be in the name(s) of your children? Would you be cosigning the loans? Using savings does not expose you to the same liabilities and risks as taking loans, which is what makes these questions important. If your kids are like mine, one may be a bit more financially responsible than the others. So, if you took the 529 savings for the junior kids and applied it those savings to your oldest child's education, will the younger two be more or less responsible when it comes to their student loan payments? Or will you take full responsibility for the loans?
Earnings Potential - What schools and majors the children are pursuing? For example, if your oldest is pursuing a degree in Philosophy and your second a degree in Engineering, it might be more advantageous for the second to take the loans knowing their career path has a higher job placement rate and earnings potential, and therefore lower risk of defaulting on their loans (or vice versa).
Time Until College - While your 17 year old is on the cusp of college, your 13 year old has about five more years of earnings potential before they would need to draw on savings. So you could make an argument that you can replace those savings or that you have time to accumulate wealth to replace those savings in order to fund their college.
Student Loan Rates - Student loan rates are unlikely to go any lower than they are today barring legislative intervention at the federal level. Check out historical rates here to see what I mean: http://www.finaid.org/loans/historicalrates.phtml This is speculative, but as I said, an item to consider.
Does it Change Your Options? By drawing on savings from the younger two, are you reducing their options? Meaning, do you have sufficient resources to allow your two younger children the same level of choice and access to higher education as the oldest (I'm assuming you want to be equitable with your children, here)?
The Known and the Unknown - There is no right answer to this, but it is a risk you need to weigh: You have a college sophomore with known expenses. Are both your 17 and 13 year old definitely going to attend college? Even if they do, you do not know where it would be or how much it would cost.
Social Perception by Family Finally, how might your drawing on savings from one child's account for another be perceived among your children? Financially, it's reasonable for you as the parent to look at the accounts in aggregate, as household resources to be reallocated as necessary. This may be the case, but many people perceive separate accounts as their accounts. If you used savings for the first child and there were none left for the last, what happens when that child finds out? Maybe the answer is that it doesn't matter, but it's at least something to consider.
There are some important things to consider regarding financial aid, the AOTC, and more that are outlined nicely here, as well (though the article never really does answer the question). Between the aforementioned, this should get you started as you have conversations with your family. I hope it helps as you make your decisions.
VP, Research & Development
This information does not constitute tax advice and is provided for informational purposes only. Please consult your tax advisor, financial advisor, local taxing authority, and/or plan provider or sponsor for more information.