investing with student loan money Forum

[Young Marino]

So I will be taking out student loans to finance my legal education. I believe I am setting myself up well to get a pslf eligible job as I have been interning at a government agency (that has already offered an internship after 1L) and I plan to structure the courses I take around that 2L and 3L while keeping the connections I've made and eventually doing my CLI there. If I take out the maximum amount possible in loans, I would seem to have $5k-$7k more than I need because I will be living with my gf which make COL a little lower and my parents will be helping out with living expenses. With my dedicated interest to public service and looking at a job that offers ibr/pslf, should I invest with the extra money on hand?

[rinkrat19]

I think that's illegal.

[patogordo]

since pslf isn't a sure thing, you're going to want to invest in something that could never go down, like bitcoin

[Young Marino]

I think that's illegal.

How would it be? I would plan to keep that $ in a separate account until graduation. Then once I get some income look into a roth ira

[Young Marino]

since pslf isn't a sure thing, you're going to want to invest in something that could never go down, like bitcoin

Lol

[jn7]

Yeah I wouldn't do it just sounds like trouble or at least do some ->serious<- research to find out whether it is legal. If you do, post and let us know if it's fair game.

[rinkrat19]

I think that's illegal.

How would it be? I would plan to keep that $ in a separate account until graduation. Then once I get some income look into a roth ira

Is investing an "educational expense"?

Incidentally, where are you planning on investing it that's going to earn more than the interest it's accruing?

[Young Marino]

Yeah I wouldn't do it just sounds like trouble or at least do some ->serious<- research to find out whether it is legal. If you do, post and let us know if it's fair game.

So far all the sites I've looked at say it's fair game. Kust googled "investing with student loan money" and no sites say anything about it being illegal.

[jn7]

Yeah I wouldn't do it just sounds like trouble or at least do some ->serious<- research to find out whether it is legal. If you do, post and let us know if it's fair game.

So far all the sites I've looked at say it's fair game. Kust googled "investing with student loan money" and no sites say anything about it being illegal.

Haha I don't know if you are being sarcastic or not, but googling is not research!

[rinkrat19]

Yeah I wouldn't do it just sounds like trouble or at least do some ->serious<- research to find out whether it is legal. If you do, post and let us know if it's fair game.

So far all the sites I've looked at say it's fair game. Kust googled "investing with student loan money" and no sites say anything about it being illegal.

Stafford Loans can be used to cover a student's total Cost of Attendance (COA). COA typically includes tuition, room and board, books and other education-related expenses required by the university.

What can I use my federal student loan money for?
You may use the money you receive only to pay for education expenses at the school
that awarded your loan. Education expenses include such school charges as tuition,
room and board, fees, books, supplies, equipment, dependent child care expenses,
transportation, and rental or purchase of a personal computer.

[Young Marino]

I think that's illegal.

How would it be? I would plan to keep that $ in a separate account until graduation. Then once I get some income look into a roth ira

Is investing an "educational expense"?

Incidentally, where are you planning on investing it that's going to earn more than the interest it's accruing?

Again, this idea goes with hoping that I get a pslf job which is what I'm really shooting for here with this pre-law internship. When taking advantage of pslf/ibr you really only pay back $35k-$50k on a $180k+ loan since it's forgiven after ten years and your payments are tied to your income.

[nachosrgood]

.

[A. Nony Mouse]

I don't see how this is remotely parallel to taking out loans instead of using your portfolio to pay for school. As rink points out, the loans are designated for educational expenses, not investing.

[nachosrgood]

A Nony Mouse you're right. The below doesn't apply here. But I'll keep it in case people with investment $ are considering going into PI.

So I will be taking out student loans to finance my legal education. I believe I am setting myself up well to get a pslf eligible job as I have been interning at a government agency (that has already offered an internship after 1L) and I plan to structure the courses I take around that 2L and 3L while keeping the connections I've made and eventually doing my CLI there. If I take out the maximum amount possible in loans, I would seem to have $5k-$7k more than I need because I will be living with my gf which make COL a little lower and my parents will be helping out with living expenses. With my dedicated interest to public service and looking at a job that offers ibr/pslf, should I invest with the extra money on hand?

I think that is reasonable to invest it. It is that, or the alternative of returning the money. I asked my financial aid advisor if I could take out loans instead of using my portfolio to pay for school. She said that is fine. This seems quite parallel to that.

To make this easy, I will assume you will have 6k in excess loans to invest and your investment returns would amount to 6%. Also assuming you have a stafford loan, meaning a loan interest rate of 5.4%.

If a Stafford, the loan accrues interest only on the principal while you are in law school. After you graduate interest is accrued on everything (principal + interest). Good news.

This means your invested fund (assumed 6% ROI) will return more money than the 5.4 interest Stafford loans while you are in law school.

So regardless if you do PI or not, you likely benefit. Either you do PI and your school pays** your minimum payments until you get to 10 years and in the meantime you profited an extra 6k+marginal interest. OR you change paths and go into the private field. Here you can immediately pay back the 6K loan+interest with your invested 6k.

**BUT you should check with your school financial advisor about your LRAP program. This could make this idea of yours not worth it. They may reduce your LRAP program depending on your assets.

For example my school uses the following formula if you have assets:

Actual LRAP payment= LRAP award - LRAP award * (total assets/total education debt)
Actual LRAP payment= 0 = $300 per/month - 300 (40,000 total assets / 40,000 total ed debt)

[nachosrgood]

OP-- PM me if you want me to start another thread

Can anyone tell me if most t-14 schools reduce their lrap awards by the proportion of assets to total ed debt? If they don't, it might impact my thoughts on transferring.

Example from my school:
Actual LRAP payment= LRAP award - LRAP award * (total assets/total education debt)
Actual LRAP payment= 0 = $300 per/month - 300 (40,000 total assets / 40,000 total ed debt)

[bloustbloust]

You should take less debt rather than take extra and invest in it. Stocks are at all time highs. If you lose, you will be paying interest on your losses. Investing in stocks is a good thing, but not if you can't afford it. Have some patience.

[kartelite]

Yeah I wouldn't do it just sounds like trouble or at least do some ->serious<- research to find out whether it is legal. If you do, post and let us know if it's fair game.

So far all the sites I've looked at say it's fair game. Kust googled "investing with student loan money" and no sites say anything about it being illegal.

Haha I don't know if you are being sarcastic or not, but googling is not research!

I hope you're joking. Google is the most powerful research tool used across industry and academia.

[jn7]

Yeah I wouldn't do it just sounds like trouble or at least do some ->serious<- research to find out whether it is legal. If you do, post and let us know if it's fair game.

So far all the sites I've looked at say it's fair game. Kust googled "investing with student loan money" and no sites say anything about it being illegal.

Haha I don't know if you are being sarcastic or not, but googling is not research!

I hope you're joking. Google is the most powerful research tool used across industry and academia.

There is a huge difference between "googling" something and actually utilizing google as a research tool. I don't think typing in "investing with student loan money" in google and seeing no sites claiming it was illegal as being sufficient research, but yes you are right, google is extremely powerful that's a fair point.

[patogordo]

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[kartelite]

There is a huge difference between "googling" something and actually utilizing google as a research tool. I don't think typing in "investing with student loan money" in google and seeing no sites claiming it was illegal as being sufficient research, but yes you are right, google is extremely powerful that's a fair point.

Fair enough. The fact that you can't find something on a quick Google search doesn't mean it isn't the case, which I guess is the point you were trying to make. Obviously the relevant concern should be the reliability of the site itself, not the medium by which it was found...and Google does a great job of finding stuff, even journal abstracts on JSTOR, ResearchGate, etc.

[patogordo]

There is a huge difference between "googling" something and actually utilizing google as a research tool. I don't think typing in "investing with student loan money" in google and seeing no sites claiming it was illegal as being sufficient research, but yes you are right, google is extremely powerful that's a fair point.

Fair enough. The fact that you can't find something on a quick Google search doesn't mean it isn't the case, which I guess is the point you were trying to make. Obviously the relevant concern should be the reliability of the site itself, not the medium by which it was found...and Google does a great job of finding stuff, even journal abstracts on JSTOR, ResearchGate, etc.

calm down larry

[Young Marino]

OP-- PM me if you want me to start another thread

Can anyone tell me if most t-14 schools reduce their lrap awards by the proportion of assets to total ed debt? If they don't, it might impact my thoughts on transferring.

Example from my school:
Actual LRAP payment= LRAP award - LRAP award * (total assets/total education debt)
Actual LRAP payment= 0 = $300 per/month - 300 (40,000 total assets / 40,000 total ed debt)

Unfortunately, my school doesn't offer a lrap program so I would have to pay the minimum $300 a month on my PI salary for ten years. Still not a bad deal. I really just don't want to work in the private sector. Yes the pay is much better than working in PI but there's so much more to being an attorney than just money contrary to typical TLS rationale. I really want to be able to make an impact in my community with the agency I'm working with now

[Tiago Splitter]

there's so much more to being an attorney than just money

lol. Says the guy looking to use federal educational loan money to scam the government into giving him free cash.

Anyways, watch out for coming PSLF changes. Obama has proposed capping PSLF at $57,500.

[AmandaPanda]

Unfortunately, my school doesn't offer a lrap program so I would have to pay the minimum $300 a month on my PI salary for ten years.

1. You don't have a PI salary right now.
2. You really think you're guaranteed a government job 3 years from now, especially in this economy, when competition for public sector law jobs is fierce?

[jumpingjack]

The OP truly sounds like a public-interest minded individual.