The initial beneficiary of 529 plan can be virtually anyone you choose--even yourself.
529 deductions are not deductible from federal taxes. You have about a 60% chance of living in a state that allows you to deduct contributions to your state's plan from your state taxes. I'd be more specific, but your profile is pretty much empty and there's no location info to assist me in determining if this applies to you or not.
if that does apply I'm pretty sure it's limited to earned income, so you get little benefit from depositing the loans, and it generally only applies to YOUR state's plan.
The major benefits to 529 plans are that the money grows tax free, and withdrawals are not subject to taxes. However if you are not investing long term, then it's pretty hard to gain much from those benefits.
Since you have such a short time horizon, you'll want to make sure the plan investments are directed to very low risk vehicles like a money market fund.
One of the better sources for 528 info is www.savingforcollege.com