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I am aware of the purpose of Student Loans.

However if not immediately used, I park some of the money in a savings account.

But would it be legal to use the same funds in a retirement account (roth ira), brokerage (index funds, stocks, bonds, etc.), and college 529 accounts, to purchase investment instruments?

Given the nature of the question, let me know if I should ask a mod to migrate this question to Personal Finance and Money SE instead.

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Yes. You could use student loan proceeds for these purposes. Student loan proceeds are not tracked or traced.

If you did so on a wholesale basis (taking out loans intending to cancel your courses before tuition it due to raise money for other purposes), you might be engaged in loan fraud, but since student loans cannot be discharged in bankruptcy, while other loans can be discharged in bankruptcy, that would be a very stupid, self-defeating kind of fraud (which isn't to say that I haven't encountered it once or twice).

Some tax preferred accounts (e.g. for retirement) have contribution limits based upon your taxable earned income, however, so while you could use student loan funds to put into those accounts, there would be strict limits on your contributions due to your low income.

  • In my mind, sitting in a savings account erodes the value due to inflation. Putting the money in anything but offers a higher ROI depending on risk. But it is good to know that this action in of itself is legal. – Frank FYC Jan 2 '18 at 20:34

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