Investing student loans?

[Jerome Graham]

I have been considering taking out a student loan and then just sticking it into an index fund and letting it grow through college. The fact that they don't have an interest rate and don't have to be paid off till a couple months after graduation make it seem like an easy way to make some money.

Has anyone here ever done this before and if so any insight into it would be nice. FYI I'm a freshman so I'll have a couple of years for the money to accumulate. Also I have just a basic understanding of stocks and have only invest a couple of grand in an index.

Thanks for the advice.

[Shoe]

They do have an interest rate, and you get charged interest even during the period where you do not have to make payments (which is from when you take out the loan until 6 months after you graduate).

However, the interest is low (around 7% or less depending on what you qualify for), and the interest is tax deductible, so it is not all bad.

Unless you happen to catch the market at the wrong time, you will probably (depending on what/how you invest), come out ahead if you invest your student loan money.

[emon87]

I'm pretty sure that the good loans are supposed to be used ONLY for educational expenses.

Also, don't forget you need to pay taxes on your earnings