Student Loans and mutual funds

[Goo_wak_jai]

I was wondering if anyone knows the answer to this. Can a student that is currently on a student loan allowed to buy mutual funds?

If the student has graduated but has and outstanding balance with the loans can they still purchase or own mutual funds?

Any help will be appreciated

Thanx

[msommers]

I think it would reflect badly for the coming year.

Just throwing this out there, but if "someone" is using student loan money to put into mutual funds for a mild earning in interest, they can go fuck themselves.

[Freeskier]

^ I know a few people who didn't need them who took out student loans, invested them for 3-4 years, graduated, paid them back and made a bit of profit. Don't really see the problem, unless they're taking money from those people who might really need the loans?

[Goo_wak_jai]

Originally posted by Freeskier
^ I know a few people who didn't need them who took out student loans, invested them for 3-4 years, graduated, paid them back and made a bit of profit. Don't really see the problem, unless they're taking money from those people who might really need the loans?

So I'm guessing it is allowed?:dunno:

[Freeskier]

Yeah, no idea lol. I needed all mine haha. No investing for me.

[msommers]

Originally posted by Freeskier
Don't really see the problem, unless they're taking money from those people who might really need the loans?

Exactly.

What the fuck is with people's morals these days? Abuse a system that gives people a chance to go school where they otherwise wouldn't be able to. In a different situation, student loan money that allocated to those that didn't actually need it could get put into post-secondary institutions for newer equipment, lower tuition, better wages for professors etc.

If that's what you're using it for, I hope to every single God out there you get audited and fucked over.

[roopi]

Buy applying and taking a student loan it doesn't reduce the amount of funds available for other applicants. There really is no moral issue here.

[msommers]

You don't think there is a set budget for student loans? If not, where is the money coming from? Why would there even be a need to qualify?

[Type_S1]

I take student loans and work...I have enough money to pay for school but would be living like a slum without student loans. I use loans for tuition...everything else is paid for by work. I have mutual funds and a bank account so don't see the problem.

What is a problem is if you are well off without the loans and are just looking to be greedy and not need it at all :D

[sabad66]

When you graduate, it just becomes a normal loan and you can pay it back as quickly or as slowly as you want. So to answer your question, yeah you can buy a mutual fund if you have an outstanding student loan.

[Xtrema]

Yes on both.


Originally posted by roopi
Buy applying and taking a student loan it doesn't reduce the amount of funds available for other applicants. There really is no moral issue here.

While it doesn't affect other students who needs a loan, the money comes from the Fed budget which means it's taxpayer funded. That's the moral issue.

And imagine that your investment run into another Oct 2008. Now you owe a bunch of money with no education to show for it.

[roopi]

Originally posted by Xtrema
Yes on both.



While it doesn't affect other students who needs a loan, the money comes from the Fed budget which means it's taxpayer funded. That's the moral issue.

And imagine that your investment run into another Oct 2008. Now you owe a bunch of money with no education to show for it.

The money still needs to be paid back to the government. It is only a loan and not a gift (well in most cases). i see your point though.

[cdnsir]

For someone to get the student loan, someone had to fill out an application form. A form that asks for your financial and tax information that he legally signed off on. No way will the government grant you a loan if your numbers don't qualify... Last time I checked, cooking the numbers is a moral.. no, a legal issue no?

[max_boost]

Originally posted by Xtrema
Yes on both.



While it doesn't affect other students who needs a loan, the money comes from the Fed budget which means it's taxpayer funded. That's the moral issue.

And imagine that your investment run into another Oct 2008. Now you owe a bunch of money with no education to show for it.

Or you run in to a Mar 09 and 2 years later your returns total 80%.

Fact is, people just assume oh mutual funds will make me money, it's done this well over the last XX years etc. Pay attention people, get in the markets at the wrong time and not knowing why will fuck you over. :rofl:

[roopi]

Originally posted by cdnsir
For someone to get the student loan, someone had to fill out an application form. A form that asks for your financial and tax information that he legally signed off on. No way will the government grant you a loan if your numbers don't qualify... Last time I checked, cooking the numbers is a moral.. no, a legal issue no?

False information is definately a moral issue. I don't recall the OP saying that he was falsifying information but I may have missed that.

[CapnCrunch]

Originally posted by Xtrema
Yes on both.



While it doesn't affect other students who needs a loan, the money comes from the Fed budget which means it's taxpayer funded. That's the moral issue.

And imagine that your investment run into another Oct 2008. Now you owe a bunch of money with no education to show for it.

I'd rather they give it to a student that has the forsight and self control to buy mutual funds, than to the typical kid who pays tuition and then spends the rest on booze and partying their first month.

If you qualify, and can budget yourself, I see no problem. We need more people like this in our schools, not less.

[Xtrema]

Originally posted by roopi


The money still needs to be paid back to the government.

Then how about if you lend me $80K for 5 years and I don't pay you a dime of interest? I'll pay you back $80K @ the end of 5 years.


Originally posted by CapnCrunch
I'd rather they give it to a student that has the forsight and self control to buy mutual funds, than to the typical kid who pays tuition and then spends the rest on booze and partying their first month.


I do agree with this point. But student loan is an investment by the Fed government hoping that higher education = higher paid job = more income tax revenue.

And with any investment there will always bad ones with no returns.


Originally posted by max_boost
Or you run in to a Mar 09 and 2 years later your returns total 80%.

Investment to me should be done with money you can afford to lose.

If you can afford to lose your student loan, then in theory, you don't need it in the first place.


Originally posted by cdnsir
For someone to get the student loan, someone had to fill out an application form. A form that asks for your financial and tax information that he legally signed off on. No way will the government grant you a loan if your numbers don't qualify... Last time I checked, cooking the numbers is a moral.. no, a legal issue no?

Any system will have cheaters.

[krazykhoja]

Originally posted by Xtrema


Then how about if you lend me $80K for 5 years and I don't pay you a dime of interest? I'll pay you back $80K @ the end of 5 years.





While the loan is interest free while you are in school, the premise is that the education will allow the individual to earn more money over their lifetime. More money means more taxes, which means the government will recoup the lost interest and more over the years.

[Xtrema]

Originally posted by krazykhoja
While the loan is interest free while you are in school, the premise is that the education will allow the individual to earn more money over their lifetime. More money means more taxes, which means the government will recoup the lost interest and more over the years.

I was ninja editing when you posted which I agree but the job market has changed from 30-40 years ago. That theory on works if:

1) if your degree is actually worth something....

2) if you still make your money in Canada

3) you are holding on to a job and not self employed which seems to be the future trend.


And don't forget, the government already took on 60% cost of post secondary education before all the student loans.

[JMaj7]

You apply each year (or in Spring/Summer as well). Each time you apply, you have to declare your assets. I'm pretty sure they won't lend you as much if you have mutual funds.

The amount they lend you has a purpose (living expenses etc). I don't think it should be used for investing. I'm sure they audit the use of funds since you sign and grant them permission to your financial information.

[dawerks]

Actually, that's pretty brilliant. Not everyday you hear an original idea.

I say go for it OP! But instead of mutual funds, it seems like you are smart enough to invest for yourself. ETF's have lower MER's. I would do the 33/33/33 lazy ETF and see what happens after 4 years.

[[Yu]]

Originally posted by dawerks
Actually, that's pretty brilliant. Not everyday you hear an original idea.

I say go for it OP! But instead of mutual funds, it seems like you are smart enough to invest for yourself. ETF's have lower MER's. I would do the 33/33/33 lazy ETF and see what happens after 4 years.

Brilliant idea? you don't hear this everyday? There are so many people that want to do this, and I know of a couple that also do it.

and to reply to CapnCrunch: I like how you assumed that the mutual fund investor is some saint and is smart with money, yet every other student is just an alcoholic with utter disregard for education. What's to say the mutual fund guy isn't like any other student, but still wants to make a dime on someone else's money?

[Type_S1]

Originally posted by [Yu]


Brilliant idea? you don't hear this everyday? There are so many people that want to do this, and I know of a couple that also do it.

and to reply to CapnCrunch: I like how you assumed that the mutual fund investor is some saint and is smart with money, yet every other student is just an alcoholic with utter disregard for education. What's to say the mutual fund guy isn't like any other student, but still wants to make a dime on someone else's money?

Your sarcasm detector is not working is it?

[CapnCrunch]

Originally posted by [Yu]


Brilliant idea? you don't hear this everyday? There are so many people that want to do this, and I know of a couple that also do it.

and to reply to CapnCrunch: I like how you assumed that the mutual fund investor is some saint and is smart with money, yet every other student is just an alcoholic with utter disregard for education. What's to say the mutual fund guy isn't like any other student, but still wants to make a dime on someone else's money?

Where did I assume anyone was a saint, or anyone had disregard for their education?

Read what I said, and don't make other shit up.

[[Yu]]

"I'd rather they give it to a student that has the forsight and self control to buy mutual funds, than to the typical kid who pays tuition and then spends the rest on booze and partying their first month. "

I'd think my interpretation of that was fairly accurate.


Also, it does appear my sarcasm detector was broken.

I just read his first sentence, and saw numbers and stuff after that I did not recognize right away.

HERP DERP

[bignerd]

It does say when you apply that any excess funds you do not use or require for schooling, you are expected to return.

If you are able to afford to pay for tuition and living AND invest the funds they gave you, I would expect that you really shouldn't have qualified for the extra funds or loan in the first place.

I believe they also ask people to report abuse-i.e. classmates that take their student loans and blow $500 on a shopping spree.

[rinny]

I looked into this and your allowed a certain amount per year for the last couple years in RRSP. From what I understood when I talked to them, they don't expect you to live off mutual funds unless you exceed the average amount per year for the last few years (five years maybe??)

If you really want more details OP, just talk to the student loans ppl. Despite the preconceived notion that ppl have toward student loans, there are those who own their place of residence, and go to school and have that mutual fund egg, and they're not expected to sell everything and fund education.

[dawerks]

But how would you qualify for a student loan if you have all those assets??

[Xtrema]

Originally posted by dawerks
But how would you qualify for a student loan if you have all those assets??

ok, just checked.

You loan is evaluated by cost of school vs:

4 months of wages before school +
RRSP +
Gross resale of vehicle(s) +
Bank assets (saving acct, investment accts)


So if you invest the loan and made some $, you get less loan the following year, unless you cash out the gain and keep it under your mattress.

Have a crack at the estimator if interested:

http://tools.canlearn.ca/cslgs-scpse/cln-cln/40/sfae-eafe/sfae-eafe-r-eng.do

[bignerd]

Originally posted by rinny
I looked into this and your allowed a certain amount per year for the last couple years in RRSP. From what I understood when I talked to them, they don't expect you to live off mutual funds unless you exceed the average amount per year for the last few years (five years maybe??)

If you really want more details OP, just talk to the student loans ppl. Despite the preconceived notion that ppl have toward student loans, there are those who own their place of residence, and go to school and have that mutual fund egg, and they're not expected to sell everything and fund education.

On the contrary, I have all of the above and received a rather sharp and to the point letter that I have more assets than the cost of my schooling and I am expected to use those assets to pay for my education-student loans are for people in a financial needs based situation only. Go to a bank if you want a loan.

I didn't want a grant or anything but hate to withdraw investments for schooling, plus it is prudent to keep some savings when you own a home and have a family.

They didn't even ask me about a car...

[msommers]

I had emailed regarding this issue out of curiosity. This is the response I got:


Thank you for your inquiry.

There is a yearly budget for loan funding. The budget will usually determine the
the amount of grants of bursaries that will be issued out by the province, or the
amount of exemptions that are provided to a student or spouse regarding their
resources.

Audits are done based on random selection, targeted selection (e.g., location),
informants' calls, or computer matching with other agencies.
 the Audit Unit reviews situations that arise after funding has been approved
(e.g., the student has undeclared part-time earnings, applied as a single parent but
is allegedly common-law)
 100% of student funding applications received are subject to audit
 a student can be audited and reassessed more than once
 an audit and reassessment may cover more than one academic year
 a student can be the subject of more than one audit at a time

If a student is audited and it is determined the student had other income at their
disposal, they would be required to pay back the money which has been over-awarded
to to them.

If a student provides investment income for a second, which was not provided in the
first year, the student's investment will just be used as a resource for that school
year application.
If you have further questions, the following resources are available:

Contact the Awards Office at the school you plan to attend

Visit our website at www.alis.alberta.ca

Call the Student Funding Contact Centre:
- In Edmonton, call 780-427-3722
- Toll free in Canada, call 1-800-222-6485
Student funding advisors are available, 8:15 a.m. - 4:30 p.m. on Monday, Tuesday,
Thursday and Friday, excluding holidays
10:00 a.m. - 4:30 p.m. on Wednesday, excluding holidays.

Visit your nearest Alberta Service Centre or Canada/Alberta Service Centre