Founder of the Student Loan Report, Drew Cloud, explained, “Younger Americans are certainly the most enthusiastic about cryptocurrency; they are the most active investors and want to get involved in the space in any way possible. However, I truly thought the percentage would be lower. As a college student, your budget is thin and that extra money could be used on rent, groceries, or books,” he told the Boston Globe.
The survey “found that 21.2 percent of current college students with student loan debt have used financial aid money to fund a cryptocurrency investment,” the study found. Over four days students with debt were asked one question about buying cryptocurrency with loan money, and over one-fifth responded in the affirmative.
The Student Loan Report asserted, “Student loan borrowers would be able to pull off such a maneuver because they are given their remaining student loan funds to be used on ‘living expenses.’ Sometimes, student debtors borrow more than they end up needing for that semester of classes. Once the borrower’s college or university’s financial aid office uses the necessary financial aid to pay for courses, they send a refund check to the borrower.”
College borrowers’ spending of the money isn’t tracked officially, allowing whatever is leftover to be spent in the manner preferred by the debtor. Another contributing factor is student loan debt payments usually do not occur until after graduation, and typically six months after.
“Cryptocurrency was the hottest investment of 2017,” Mr. Cloud detailed, “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.”
Noticeably missing from the survey are data regarding how much the average university student spent of their financial aid on cryptocurrency. It also would’ve been interesting to find out which cryptocurrency students favored.
“Could they have used spent, or even saved, this money more prudently?,” Mr. Cloud mused. “Absolutely. A perfect example would be stowing that money away in a high-yield savings account that they could later use to chip away at their student debt. But there is always the chance that there is another period of explosive growth for virtual currency, and these borrowers will be laughing all the way to the bank. Or, they could just as easily lose all of that financial aid money that they just invested in Bitcoin.”