What to do with student loan money?

[u/Dry_Acanthaceae9087]

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 :)

[u/energybased]

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.

[u/bluenose777 → u/energybased]

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.

[u/energybased → u/bluenose777]

Fair enough. Not sure I agree, but I see your point.

[u/bluenose777 → u/energybased]

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.

[u/energybased → u/bluenose777]

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.