I also agree with Nicole… don’t use student loans to pay rent/living expenses unless you absolutely have to. get a job, lazy swine.

I think the best bet, not knowing the exact loan repercussions, would be to either return the excess if it’s not needed or “invest” the excess in a non-volatile fund and use the money strictly to pay for the loan after you graduate and you are required to begin payments.

So if you get $1750 extra your 2nd semester of your senior year, maybe the best bet is to hold onto to it as almost an emergency account and use those funds strictly for repayment while you look for a job. So when you get your monthly repayment booklet, send off 6-months worth of payments so you can get some breathing room while you are welcomed to the real world.

Would love to hear where I went overboard, if I did. )

That said, the first commenter said what I was going to. You mention that risking something as (relatively) minor as loss of $1,000 in capital isn’t worth an outside shot at $100-200/year. And you’re right. So if that $100 isn’t worth losing a good chunk of Zach’s original grand, then it’s damn sure not worth committing a crime for, and abusing student loan payments is indeed a crime.

Now, there’s one obvious solution Zach omitted. And it’s a solution so obvious any bonehead could figure it out. Zach needs to go to Vegas right away, without wasting another potentially-profitable minute, take his entire $1,000, and run (not walk) to the roulette table. Once there, needs to bet the entire deal on 23.

It’s just what Warren Buffett would do. If Warren Buffett was actually Warren G (and, for the record, I wish he was).

And I agree with the previous poster who said student loans should not be used for things like groceries – you should be working to pay for that. The exception is if you are in a really rigorous program like law school or medical school where you literally may not have time to work. Loans should be for tuition, books – maybe rent or student housing if you really can’t swing it without the loan. I worked 10-20 hours a week throughout undergrad to pay for food, utilities, spending money, and some of my rent and graduated with a 3.5 GPA.

Take it from someone who is still dealing with lots of student loan debt – take out as little as you can!

If it’s not too less than the best savings account or 1yr-2yr CD (I believe about 5.30% APY and 5.45% APY, respectively), there is no point in *investing* it in those options.

Plus, taxes are going to eat into whatever interest you earn over the year.

@ Balance transfers: When you say “Not worth it” – I believe you are speaking for yourself. Everyone has a different perception of risk-reward balance. Managing credit cards in time might be stressful to you, but for some people it takes less than 5 minutes a month… and probably 5 additional minutes for applying for a card or two every year. I don’t understand why this should *distract* anyone from doing something sustainable.

Of course, do something sustainable that adds value over the long term, but that does not mean that you should call everything else a hogwash – especially if you haven’t tried it.

1. Investment Management Fee: Lisa, you are confusing this with the RRSP Administration Fee associated with Self-Directed RRSP’s. A directed RRSP account does not have this annual fee (Usually $125/year plus tax) and can be setup at your local bank branch or proprietary mutual fund distributor (like Investors Group)

2. MER’s are a big concern. While the effect is smaller when your portfolio is smaller, over time they can really add up. Just so you know that I’m not trying to plug Investors Group – they have amongst the highest MER’s you can find – many funds are in the 3% range.

3. You can setup an automatic contribution plan to your RRSP without being a part of the company’s Group RRSP plan – you can even enjoy the immediate tax savings by filling out a form with HR that indicates how much you contribute – they will withhold less tax at source for you.

4. Many company Group RRSPs DO offer employer matching, usually in the 50% range. The limitations I would point out with Group RRSP’s is the limited product shelf and higher MER’s, although you are right in that the administrative costs are lower.

5. What is a high investment management fee? MER’s are much higher in Canada than in the States, but you also need to look at what kind of mutual fund you are investing in – if it is a fixed income fund the MER is high if it’s over 1.5%, if it’s a balanced fund it is high if it is over 2% and if it is an equity fund it is high if it is over 2.4%, and if it is an equity fund with international exposure than it is high if it is over 2.7% – these are rough guidelines – but don’t pull your hair out looking at MER’s when you are getting started – focus more on picking good investment mandates and constructing a proper portfolio – you may need help from a friend with experience or a referral to a trusted advisor.