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I think it's a great idea for people who do not have the money to pay for school out of pocket. This is a very responsible look at trying to minimize debt incurred while trying to go to school. If I get a loan for 8%, and can earn 5% interest on part of it until I need it, then it's almost like I'm only pay 3% in interest.
I think people are really lucky who can get through school without needing a loan. For those of us who aren't so lucky, ideas like these help reduce our overall costs.
I am doing something very similar -- I have my money in a combination of CDs and money market accounts that pay dividends monthly. The interest I am earning will go a long way toward paying what I owe!