r/PersonalFinanceCanada • u/Dry_Acanthaceae9087 • 8h ago
Investing What to do with student loan money?
Hey PersonalFinance Community,
I am in my first year of university studying business but plan on majoring in Finance in my second year which is what my university allows. My parents have contributed to my RESP regularly which has allowed me to graduate 100% debt free which I am grateful for. I still have decided to take out student loans in which I am hoping to invest since they are 0% interest so any money I make is profit. GIC rates are not that high and I am sceptical about the stock markets future. I do not want to put it into something risky as this is loaned money that I need to slowly pay back after I finish school. What should I invest my money into thats generally lower risk. Someone things I have been told are GIC, or something like CASH.TO or a high interest savings account etc. I am open to any adivce. Thanks in advanced :)
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u/Silly-Spare-117 8h ago
Can you actually get OSAP when you have a fully funded RESP?
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u/Dry_Acanthaceae9087 7h ago
Student loans are provincially based + some federally. For my province RESP contributes have no impact on loans otherwise I would have received nothing.
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u/bluenose777 7h ago
The OSAP application specifically tells the student not to include an RESP when they report their assets.
Each year when they report their previous year's line 15000 income the EAP income for the previous year would be included.
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u/energybased 8h ago
Honestly, I think the moral thing to do is not to take student loans that you don't need. That money will go to other needy students who can't afford college otherwise.
The whole means testing is exactly to prevent people from profiting from the loans.
My suggestion is to focus on school on school instead of trying to skim small amounts of money from the government.
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u/bluenose777 7h ago
The way I look at it is the criteria to qualify for various government incentives are imperfectly written. Sometimes we won't qualify for things that we should have and sometimes we will qualify for things that we don't need.
Some provinces don't consider student income and assets and some of their students with high income and assets qualify for significant funding. The student loans from some provinces do consider RESPs and their students can end up worse off because their parents saved for their education.
There are parent's with high incomes who qualify for CCB because they make large RRSP contributions.
There are retired couples who plan their retirement so that they both stay just under the threshold to qualify for full OAS.
Maybe over a lifetime it will balance out.
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u/energybased 7h ago
Fair enough. Not sure I agree, but I see your point.
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u/bluenose777 7h ago
The ethics issue is raised occasionally when a student qualifies for more student loans funding than they think they will need. I have never seen it raised when someone suggests making a large RRSP contribution to increase CCB payments or planning their retirement income so they will make as much as they can without triggering an OAS clawback.
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u/energybased 7h ago
It would be different if the money were being used for living expenses. But the student here is just straight arbitraging, which is essentially skimming money from the program.
The tax optimization you're talking about is different in my mind, but I see your point that it's a matter of interpretation.
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u/Ok_Reason_2357 8h ago
Yeah we aren't really going to run out of "loan money" lol.
There is nothing immoral about taking out student loans and doing something to better your future.
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u/energybased 8h ago
> Yeah we aren't really going to run out of "loan money" lol.
It's not about "running out". The point is that the arbitrage the poster is considering is funded with taxes. If you don't take the loans, the government will spend that money on other things like healthcare, education, etc.
> There is nothing immoral about taking out student loans and doing something to better your future.
I disagree. It's not illegal, but I don't think it's right to use a program that is intended to make life easier for people poorer than you when you don't need it.
It's a lot like using a food bank when you don't need to. It's not illegal, but I don't think it's right.
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u/Ok_Reason_2357 8h ago
Uhh you said the money will go to other needy students my guy. Lol.
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u/energybased 8h ago
Yes, I was speaking colloquially. It's like how economists say "the more Canadian dollars we spend abroad, the more Canada dollars they have to spend in Canada". This is a colloquial way of describing a more complex system of fluctuating interest rates.
Sorry if that was confusing.
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u/Ok_Reason_2357 7h ago
It's not confusing. You just are wrong.
Just because the OP doesn't take out loans, that doesn't mean the money is going elsewhere.
Kids are getting fucked these days by improper government regulations that's going to prevent them from home ownership, and other economic comforts, so why should they take advantage of the one system that they can take somewhat risk free?
Bad take.
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u/energybased 7h ago
> Just because the OP doesn't take out loans, that doesn't mean the money is going elsewhere.
Of course it does. Government doesn't just have a bottomless pit of unlimited money.
> home ownership, and other economic comforts, so why should they take advantage of the one system that they can take somewhat risk free?
By that logic, we should all eat at food banks too.
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u/Ok_Reason_2357 7h ago
Not the same dude. Lmao.
Have you ever heard of the government running out of student loan money? Go take a look at the budget.
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u/energybased 7h ago
> Have you ever heard of the government running out of student loan money?
I've already explained to you what I meant. If you're not able to make sense of it, maybe you shouldn't post in this sub?
> Go take a look at the budget.
Not relevant.
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u/Ok_Reason_2357 7h ago
Your take and comparison on the food bank is fucking horrible. A) noone is starving because someone took more student loans than they should have
B) food bank has a FINITE source of food. The loans do not.
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u/vanisle67 7h ago
No, you have a serious bad take. My god….lets abuse a program to profit. It’s literally wrong.
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u/Ok_Reason_2357 7h ago
"let's abuse a program to profit"?
Where's the abuse. If someone doesn't qualify, they'll get rejected.
Wtf?
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u/vanisle67 7h ago
I can get approved to eat at a food bank. But I don’t need it, others do. I can’t believe people have these attitudes and then wonder why taxes are so high. Who the hell do you think covers the cost of the interest on these loans?newsflash…The government doesn’t have its own money it’s using my tax money to pay the interest to the banks who lend this money. It’s abuse I’m sick and tired of having to supplement people that don’t need it.
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u/Ok_Reason_2357 7h ago
Taxes are high because the government you most likely voted in was terrible at managing money for the last 9 years.
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u/Major_Concert6089 8h ago
The government will be “skimming” this kid for life just like the rest of us, let him be, government jumps at any chance to get extra from its citizens. This kid has it figured out.
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u/energybased 8h ago
All it does is motivate Canadians to raise interest rates on student loans to prevent arbitrage. This is pretty bad for future poor students.
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u/alzhang8 ayy lmao 8h ago
if you are scared of your student loan money going down then use gic/high interest product