Can I put student loan money in a savings account?
I am a grad student. I can only take a couple of hours a semester. I qualified for a fairly large amount of low interest federal student loan money. Yet, my college and books are paid for by a private party.
Would it be wise to take out the loan money and put it into a bank account to accrue interest while I am in school? My thinking is I could take out all the loan money I can get and put it into a savings account not using ANYof it to pay for school, then when I graduate pull all of the money out, pay the loans back, and then apply the earned interest to other debts such as credit cards, bills, etc. It’s a long term plan, but I can see how the extra interest money would help.
Is this even possible? If it is, is it stupid? Or a wise idea?
I wouldn’t recommend this, I’m sorry. Considering that the average student loan rate about now is hovering around 5% and the national average savings and CD’s are about .5% and 1% respectively, you’ll be losing out on a lot of money when you begin repayment. Don’t do it, please.
Also, just in case you’re wondering, the markets may not be such a good idea either, unless you consult an advisor and can work on investing in a stable mutual fund.
Check out this website for rate information, I did the research for you on CD rates.
http://www.bankrate.com/funnel/cd-investments/cd-investment-results.aspx?local=false&tab=CDs&prods=15
