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Can one take capital for student loans that will not be needed until next year and put them in a 1-yr CD or money market account?
Wiki User
∙ 8y ago
You should not "advertise" to anyone that you are borrowing student loan money solely so you can invest it to make a profit. However, once the money is yours it's pretty hard to track. The federal regulations stipulate loan money is to be used for "school related expenses" so, if you were ever questioned, you might, might, get away with the thought that the profit would be used for future school expenses. MOST IMPORTANT: this loan money would have to be "extra" for you; in other words, you don't really need it to cover your educational expenses that year. You can't invest the money for a profit then turn around and go to your school's FA officer and say you are short your tuition, book money, etc., they will want to know what you did with the loan money.
additional: In real life investing in a short term CD will only serve to reduce the interest you are paying on the money and probably isn't a bad move if its not explicitly against the terms of the loan. The interest banks are paying on CD's and money markets is pretty dismal now,
Wiki User
∙ 8y ago
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