A new survey has found that college students are using their student loans to purchase cryptocurrencies such as bitcoin as a way of getting involved in the market.
The survey by the Student Loan Report, a website the reports on debt issues from students, polled 1,000 students over the course of four days, which was conducted by Pollfish, which specialises in online polling. Participants to the study were asked: ‘Have you ever used student loan money to invest in cryptocurrencies like Bitcoin?’
The figures showed that more than one-fifth of students said that they were using their student loans to dip into the cryptocurrency market.
Speaking to the Boston Globe, Drew Cloud, founder of the Student Loan Report, said:
Younger Americans are certainly the most enthusiastic about cryptocurrency; they are the most active investors and want to get involved in the space in any way possible. However, I truly thought the percentage would be lower. As a college student, your budget is thin and that extra money could be used on rent, groceries, or books.
Students are able to pull off this method because they often receive their student loans for that quarter they are studying to pay for their living expenses. However, for that semester of classes students may have more than they actually need. Once they have paid for their courses, for many the remaining money left over may be too good to be true.
As a result, a sizeable number of students are turning their attention to the world of cryptocurrencies such as bitcoin, ethereum, and ripple to invest their money.
According to Boston attorney Adam S. Minsky, who is a specialist in student loan matters, he said that the federal government may question whether such investments have any relation to a student’s education, adding:
I would err to the side of it not being a kosher thing to do legally, but regardless of that I don’t think it’s a wise thing to do financially.
For many students the chance to invest in cryptocurrencies may be their answer to paying back their student loans at the end of the educational career. However, the market remains volatile. This can be seen by the fact that all-time record highs in December now seem a distant memory with today’s market prices. At the end of 2017, bitcoin was trading within touching distance of $20,000 for the first time.
Now, though, at the time of publishing, the number one digital currency is valued at $8,490, according to CoinMarketCap. At the beginning of January, ethereum was valued over $1,400, but it has since slumped to $520.
As Cloud says though:
There is always the chance that there is another period of explosive growth for virtual currency, and these borrowers will be laughing all the way to the bank.