Taking out extra grad plus loans to invest money with RAP repayment.
Okay, I'm trying to sanity check something.
I'm starting law school this month (pre-July 1st disbursal, Grad Plus access). I'm thinking about borrowing more than I actually need for school and investing the excess. Then letting it sit and compound for 30 years while I'm on RAP.
Numbers: ~$225K if I just borrow what I need (cost of attendance + old 100k in federal debt)
vs ~$384K at max borrowing.
With RAP, assuming like ~$200K average salary lifetime, I'd pay off smaller loan in 17-20 years vs having the debt forgiven at year 30 if I max out borrowing - but I'd have ~$160K growing for 30 years.
I also figure, if something changes in terms of policy that changes the math, I can just throw that extra money sitting there back at the loan? I'd take a hit based on origination fees and interest during school, but after that, balance isn't growing anyways due to interest subsidy?
Am I missing anything? Has anyone else considered this approach to school debt? Am I being too smart by half?
Edit: Okay, my bad. I tried to simplify the story and have had it pointed out that I just detailed a plan to commit fraud. Fuller picture is this - my parents are very generously giving me a $180k gift for law school, and I'm trying to decide if that's more useful put towards tuition, or invested. In either scenario, I would only be using the loan money for it's intended purpose (tuition and cost of living).