Comments on: Investing Your Student Loans– What You Need To Read

By: MD

MD — Sat, 23 Jan 2010 00:24:01 +0000

Man that’s cool to hear that it worked out! I really want to hear this side of the argument.

The unfortunate part is that too many rookie investors attempt this strategy. Not everyone will be as successful as you.

By: MD

MD — Sat, 23 Jan 2010 00:23:00 +0000

You bring up some excellent points John. If you lose the money, you don’t lose your own money. You lose the money that you still have to pay back… with interest.

By: Friday Links - Canadian Finance Blog

Friday Links - Canadian Finance Blog — Fri, 22 Jan 2010 13:14:48 +0000

[...] Studenomics looks at investing your student loans. [...]

By: Roundup and Link Love: Crashed Hard Drive Edition

Roundup and Link Love: Crashed Hard Drive Edition — Fri, 22 Jan 2010 12:02:34 +0000

[...] Investing Your Student Loans– What You Need To Read. Unfortunately I spent mine on living expenses, tuition, and books. [...]

By: Friday Roundup Olympic Edition

Friday Roundup Olympic Edition — Fri, 22 Jan 2010 10:03:56 +0000

[...] Investing Your Student Loans– What You Need To Read Good things to think about from Studenomics [...]

By: JohnnyH

JohnnyH — Thu, 21 Jan 2010 22:09:15 +0000

I graduated in 2004 and I did exactly this… I accepted every dime of stafford loan I was offered. Even when I didn’t need it because I lived at home and worked my way through.

The interest earned in savings/checkings/CDs in college and since has been thousands of risk free dollars. Arbitrage baby!

I still have almost all of this student loan debt, which is locked in at ~2.6% interest… I still have most of it in CD ladders earning well above this. Still you can beat 2.6% with some fixed rate vehicles.

By: John

John — Thu, 21 Jan 2010 14:38:53 +0000

While it is an interesting article, I really dont like the idea leveraging any debt for investment purposes. You increase the risk of not being able to see a profit when you factor your loan interest rate. In addition, if things really go south and you lose your entire investment, the student loan debt would remain even after bankruptcy.

By: MD

MD — Thu, 21 Jan 2010 04:46:08 +0000

And you don’t run a personal finance blog because…?

For simplicity purposes, I didn’t even touch upon inflation in this article. This opens up another debate: how will you beat inflation with your investments? This is where the whole topic gets very tricky. As I mentioned the idea of investing your students loans for profit is only perfect on paper. Once you get to the bottom line financial stuff you will be in for a nice surprise

I’ve actively traded stocks in the past and let me tell you this- I would rather focus my energy on something I have control over (my blog) as opposed to something that is out of my reach.

By: MD

MD — Thu, 21 Jan 2010 04:33:05 +0000

You bring up a viable alternative Ethan.

The 20 year horizon is never used in this case because the student loans need to be paid back slowly 6 months after you college graduation. The longer you prolong payment the more money you lose to interest along the way.

I would personally (well I have) stick with the side jobs in college idea. At least this way you learn to appreciate the value of a dollar. Plus I hate any kind of debt.

By: MD

MD — Thu, 21 Jan 2010 04:28:13 +0000

You bring up a good point Ken. I used the investing option but there are many college students/graduates/drop outs that have used student loan money for everyday expenses.