University Students Buy Crypto with Financial Aid

Our youth lean toward the cutting edge of societal progress.  In the age of cryptocurrency, it is no different. The Student Loan Report and Pollfish conducted a small study, in March 2018, to gauge if students were deciding to buy cryptocurrency.  The survey consisted of 1000 university level students. The only criteria were that they had a student loan debt.  When asked if they used any portion of that debt to buy cryptocurrency, such as bitcoin, their answers were surprising.


Students Buy Cryptocurrency

In short, the answer was yes. Students buy cryptocurrency at a rate of over twenty percent.   Drew Cloud founded the student loan report, he explained that younger Americans have a healthy enthusiasm for the cryptocurrency.  In fact, they are the most active investors and aim to be involved in the system any way they can. He told the Boston Globe he initially believed the percentage would be lower because of the small budgets college students have.  However, students made sacrifices to fund their investment.

It is not unusual for students to borrow money over what they need to cover a semester of school.  The school’s financial aid office uses the portions of money needed for their education first.  After their school expenses are paid, students receive the portion of loan money left to use toward living expenses.  It is that refund money they were using to invest.

There is no official tracking system that monitors how college students spend excess loan funds.  This leaves a grey area where the debtor can apply for the money as they see fit.  Another reason students may opt to use the money for investment is that the loans do not go into repayment status until about six months after they graduate.  

Is Cryptocurrency A Wise Investment?

Using their educational funds in this way could be viewed very savvy or really ill-advised. Mr. Cloud says a point of consideration is that “Cryptocurrency was the hottest investment of 2017, especially for young Americans, so it is easy to understand why many college borrowers would think it was a savvy way to spend their refund checks. Some might have even figured that they would be able to quickly pay off their student debt because not long ago every single virtual currency was experiencing seemingly unstoppable growth.”

The study did lack significant information about the trend.  A question that creeps into our minds is exactly how much the students polled were investing in cryptocurrency.  They type of cryptocurrency they favored would also have been useful information.

Mr. Cloud expressed it is arguably the students could have saved the money and applied it to a high yield savings account that would later serve for debt repayment.  They could have also used it for expenses considered traditionally pragmatic.  However he explained that there could very well be another period of “explosive growth for virtual currency, and these borrowers will be laughing all the way to the bank.”  

Nevertheless, Mr. Cloud cautions, “they could just as easily lose all of that financial aid money that they just invested in Bitcoin.”  Either way, a significant portion of our youth are making an executive decision to play the odds and considering they will be taking the torch of future industry, the rest of us might want to take heed and invest as well.