UNSUB Direct Loans

Hello, first time FAFSA loan user for graduate school. I haven’t gotten my official award letter YET, but my cost of attendance per semester is around $3,700. I am guessing I will receive around 7-10k per semester. I will not be using this money for books or living expenses as I am employed full time. So I understand these loans will gain interest immediately, so I will definitely be paying that monthly so it does not go to my principal amount in the end. Besides this- I will NOT be spending the additional money. I planned on putting it in a separate savings account and just not touching it until I pay off some balance of the loan at the end of every semester, but then I thought.. what if I put it in my HYSA or a CD to gain interest while it sits? Am I allowed to do this? How would it impact taxes/income I claim to the IRS?? Is this even legal??