A recent survey conducted by Student Loan Report revealed that many college students are using their student loans to invest in bitcoin – the most popular cryptocurrency in the world.
This method of using their student loans to invest in the cryptocurrency industry may be in breach of the terms provided by the Department of Education.
The survey which was carried out from March 16 to 20 quizzed 1,000 college students who had availed student for their students. The survey found that more than 21.2 percent of the respondents were found to be using their financial aid money to invest in Bitcoin, Ethereum and other cryptocurrencies.
The numbers surprised many including Drew Cloud, the founder of the Student Loan Report. Cloud said that while he believes younger Americans may be the most enthusiastic about the cryptocurrency industry, he was still surprised to see how high the percentage of college-level crypto investors turned out to be.
Because of the rise and popularity of cryptocurrencies, many US universities such as Stanford University and Carnegie Mellon University have started offering courses on cryptocurrencies and the blockchain technology that runs it. This may have been one of the things that fueled the interest amongst college students to invest in the digital currency.
Students Rely On Loans To Fund Their Investments
With the prices of bitcoin skyrocketing in recent months, students have struggled to find money to invest. The easiest option was to take funds out of their student loan and use it to make investments in bitcoin. This is a violation to the student loan agreement and loan experts share the sentiment that investing their loaned money might be betraying their aid agreements.
In a statement, a spokesperson of the US Department of Education said,
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
This means that since these investments are not related to the students’ education, the money shouldn’t be used this way.
In addition to the sentiment that investing student aid money is legally questionable, the fact remains that the investment in bitcoin is a high-risk and volatile investment which poses a threat for students who are tight on cash. Cryptocurrency prices continue to be one of the most volatile investments in the market, as their prices keep plunging and soaring at a moment’s notice.