Give to Caesar what belongs to Caesar. Thus, a student loan is strictly offered to fund your education, either from a private lender or federal government. Many students that invest with student money don’t know if it is legal. In other words, loans may be excess and will attract investment. But then, let’s find out.
WHAT YOU SHOULD KNOW
- It is legal to invest in student loan money. Thus, it falls under a legal and moral gray area.
- If you borrowed subsidized loans from the government you could attract legal actions when you invest the money for funding education.
- Private student loans call for lesser legal actions for investing student loans.
- What if you were unable to raise enough till the due date of repayment? You are really in hot soup! Thus, this is risky.
From many experiences that I have had, it benefited some while some other persons did not use the student loan money to invest. For instance, a college student around 2002 made this mistake of using student loans. But in the end, the mistake made him a commander of the stock market.
Investing Federal Government Student Loans
Federal student loans have more strict rules. Especially when insured from the office of the Department of Education. Nevertheless, private lenders or even lenders contracted by the U.S. Department may consider investing student loan money legal.
Because federal student loans are subsidized, students may spend their student loan otherwise without breaking the law. But, you will face legal actions from DOE when you are discovered. Thus, you may have to repay the subsidized interest.
Student Loan Amounts
When a loan is granted, the amount disbursed is based on the following:
- The status of the account (dependent or independent)
- Parental income,
- Type of program ( part-time or full time),
- The income yearly.
But, there is something you need to figure out which is the “Cost of attendance”. In other words, the end product of the above analysis is equal to the cost of attendance; that is the loan amount. In addition, the cost of attendance contains a living allowance especially for students of the campus.
Students who choose to invest with student loans make use of the gray area of the student loan which is the living allowance. This is because; Living allowance will be given in cash to the student while the part that settles the bills will be pushed to the school directly. Living allowance may be excess where the loan covers the cost of tuition, room, and board
Note: if you must invest with your student loan, avoid using government-subsidized loans as you may land yourself into legal actions when caught. However, the risk is inevitable if you must happen. Because you can survive or fail on the task. Therefore, your inability to raise the money back makes it not risky and unfavorable.