The ODT has a story of a student who made free money from his interest free loans. Now there were bank loans, not the government student loans, but the principle is the same in terms of highlighting why it is a bad idea.
Of course the interest free bank loans are a deliberate loss leader to try and get students to join their bank, hoping they will remain with them. And it tends to work as a strategy.
At school I banked with Wesptpac after winning a bank account (and some money) in an Australasian maths competion. But at university went with BNZ for the interest free overdraft and have stayed with them ever since.