Many college students consider trading cryptocurrency to be a better use of their student loan money than traditional spending such school supplies and other living expenses.
According to a study by The Student Loan Report, over one-fifth of current university students with student loan debt indicated that they used their borrowings to invest in digital currency such as bitcoin.
The student loan news and information website found that 21.2% of the 1,000 students surveyed indicated that they used their borrowed cash to gamble on the highly volatile digital currency market. While school administrators may look down upon the practice of using borrowed funds for non-school expenses, the website indicates that there are currently no rules against it. College students are able to use loans for "living expenses," a flexible category that covers a wide range of potential necessities.
(See also: Bitcoin Will Get Millennials Trading: TD Exec.)
Adding to Huge Debt Burden
As the average student now graduates with tens of thousands of dollars in student loan debt, investing in the crypto-market could either be an easy way to add to the burden, if the assets plummet in price, or in the best-case scenario, help them pay it off faster. According to higher-education expert Mark Kantrowitz, seven in 10 seniors are set to graduate this spring with borrowed money, carrying an average of $37,172 in student debt as they enter the workforce, as reported by the Wall Street Journal.
Federal student loan interest rates range between 4% and 7% for the 2017 to 2018 school year, depending on the type of loan and level of education.
Meanwhile, bitcoin has lost well over half of its value since reaching a record high just short of $20,000 in December 2017. At a price of $8,092.75 at 4:48 UTC on Tuesday, the price of bitcoin has tanked more than 14% over the last month, yet still reflects a near 700% gain over the last 12 months. Rival digital coins, such as ethereum, ripple, and litecoin, have also been on a rollercoaster ride this year, as investors become increasingly concerned about heightened regulation of the decentralized market.