<prompt> Human: I am a graduate student and will be getting 4000 refund on my student loan this semester. The rate on the loan is 5.8 and I dont have to start paying for 2 years. My total loan is 10000 to make the math a little easier. It is safe to assume this will happen every semester for 2 years.It is not illegal to invest the refund. I think that investing the 4k in a balanced mutual fund each time would be the best course of action. Upside is maybe higher growth. Down side is a higher payoff on loan.So is it better to have a 40k loan and 12k growing at 10 for 2 years or a 28k loan at 5.8?  <response>: It is not illegal to invest the refundI would refrain from investing funds that were loaned to aid in schooling. I am fairly certain that they can only be used to help get you through school, which would not include investing. 