Is it illegal to earn interest on unsubsidized loans?
Tuesday, May 19th, 2009
disco_stud61 asked:
I’m a student and I get many offers from the government and private companies for subsidized and unsubsidized loans. For those who don’t know, unsubsidized loans are loans where the interest is paid by the government or private company until 6 months after I graduate or become less than a full time student. So it could theoretically be a free loan assuming I repay the principle within those 6 months, therefore avoiding interest.
I’m a student and I get many offers from the government and private companies for subsidized and unsubsidized loans. For those who don’t know, unsubsidized loans are loans where the interest is paid by the government or private company until 6 months after I graduate or become less than a full time student. So it could theoretically be a free loan assuming I repay the principle within those 6 months, therefore avoiding interest.
My question is can I take out these loans and put the principle in high yielding CDs or savings accounts until it is time to pay them back? This way I make money on the interest from the loans, build credit, and won’t have to pay interest. It seems like the government and private companies probably would not want me to do this as I am profitiing from a service that they are hoping to eventually profit from. That’s why I ask if it is illegal in some way. Thanks.
Vivian
