College Students Are Using Financial Aid to Buy Cryptocurrencies
The Student Loan Report — a website that covers news on student loans — reports that more than 21.2 percent of college students use their financial aid money to invest in cryptocurrencies.
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If bitcoin really ends up being the next global currency as Twitter CEO Jack Dorsey believes will happen, then some students investing in crypto today could have some positive outcomes. Yet risking strings-attached financial aid on a hyper-volatile asset is not a wise thing to do.
Some Students Choose Bitcoins Over Books
The survey was arranged by Pollfish — a survey platform that delivers surveys online and via mobile apps on a global scale. The website polled 1,000 students loan borrowers, out of which 20 percent of the students revealed that they invest some part of their living expenses into cryptocurrencies.
Student Loan Report founder Drew Cloud, told commented:
“Living on a tight budget, one would think students would spend that money on groceries, rent or school supplies rather than bitcoin and ethereum.”
In response to the surfaced report, Elyssa Kirkham, a loan expert at Student Loan Hero — a website for managing and eliminating student loan — told CNBC that students investing their money in cryptocurrencies are betraying their aid agreements.
Kirkham stated, “If you invest the student loans in cryptocurrency and lose money, you will still owe the student loans.”
A very true and prescient point, indeed.
Also, a spokesperson for the U.S. Department of Education noted, “Federal student aid funds are to be used only to help meet the costs of attending an eligible institution of higher education. Investing is not considered an appropriate use of federal student aid funds.”
Students See Cryptocurrencies as ‘Get-Rich-Quick’
Using financial aid for crypto is not limited to the United States; Asian countries such as South Korea are facing a similar problem. In the past, the South Korean Prime Minister Lee Nak-Yeon shared his concern about the country’s youth entering the cryptocurrency market. At the time, he said: “There are cases in which young Koreans including students are jumping in to make quick money and virtual currencies are used in illegal activities like drug dealing or multi-level marketing for frauds”
Universities in the U.S. have already started offering courses on cryptocurrencies and its underlying blockchain technology. Stanford University and Carnegie Mellon University both offer courses on cryptography which have proved to be popular among students.
However, learning about cryptocurrency and investing in it are two different things. For college students whose budget is thin, the risk is extraordinary considering the volatility of the cryptoeconomy. However, there are chances that the volatility could swing the other way, where students receive huge returns.
It’s a gamble, simply put.
Is it wise for students to invest borrowed money into volatile assets? Let us know your views in the comments section below.
Images via Stanford University, marj3