Against Qualified Education Expenses that have been incurred in the same year, which is not the same thing as student loans that have been incurred during the year.
Not necessarily. As noted above, tax- and penalty-free 529 distributions are limited to the amount of Qualified Education Expenses incurred during the year, which may not be the same thins as the amount of student loans taken out during the year.
The IRS doesn't routinely ask for and probably won't require any documentation matching 529 distributions to Qualified Education Expenses (not student loans incurred) during the year, but to be on the safe side you can maintain records of payments to the school and receipts for books and other required supplies or equipment.
No.