1 in 5 US University Students Use Federal Loans to Fund Cryptocurrency Investment

  • 3 April 2018
  • Cas Proffitt

1 in 5 college students in the United States is using student loan money to fund cryptocurrency investments according to a recent, small study.

College is often seen as a time of wonder when newly budding adults can explore their interests, expand their relationships, find themselves, and plot the careers that will encompass much of their lives and, hopefully, passions. Many modern university students are experiencing a far less happy-go-lucky time, however.

For one, many students are faced with the reality that their bachelor’s degree may not land them a job whatsoever, but may put them out of the running for some minimum wage jobs due to “overqualification.” Add in decreasing median incomes for some demographic groups and a 234% increase in tuition costs between ‘93 and ‘15. Students are being crushed with debt to the point that 45% of those with student loan debt say that college was not worth the cost.

That’s no insubstantial portion of students either. Student loan debt in the US has been described as a “crisis”—$1.3 trillion dollars across 44 million borrowers and nearly $33 billion in delinquent balances.

Perhaps these factors have contributed to the results of a recent study of 1000 college students by The Student Loan Report—approximately 1 in 5, or 21.2%, students in the US are using their financial aid to fund cryptocurrency investments.

Bitcoin and similar cryptocurrencies are highly volatile, but have made many millionaires in recent years. Crypto trading has become a full-time profession for many. Investing in cryptocurrency may result in quick cash but can also lead to substantial losses. These stats seem to suggest that struggling students are willing to take major risks, even with borrowed money, to attempt to secure their financial futures.

When students are eligible for financial aid, the loan money first makes its way to the school to cover courses. Then, any remaining balance is sent to students in order to cover living expenses, although the expenditures in this category are in no way tracked. It is this money meant for living expenses that students are are instead trading for bitcoin, ripple, ethereum, and similar cryptocurrencies.

Technically, of course, this usage of funds is against the rules. According to a spokesman for the US Department of Education,

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

Without a system in place to document the use of “living expense” funds and while crypto-booms are still in the hopeful dreams of many, it’s hard to say whether or not we are likely to see any decline in this activity.

What do you think of students using federal student aid loans to fund cryptocurrency investments? Let us know in the comments below!

About Cas Proffitt

Cas is a B2B Content Marketer and Brand Consultant who specializes in disruptive technology. She covers topics like artificial intelligence, augmented and virtual reality, blockchain, and big data, to name a few. Cas is also co-owner of an esports organization and spends much of her time teaching gamers how to make a living doing what they love while bringing positivity to the gaming community.