(Editor’s note: A CNBC spokesperson quoted from the Student Loan Report for this article, Drew Cloud, is not a real person according to The Chronicle of Higher Education and has been endorsed by CNBC. An article published April 24 reported The Chronicle states that Cloud is in fact a fake entity created by Student Loan Report’s parent company, Shop Tutors, who also operates as LendEDU. For transparency, CNBC is keeping the original report released on March 23rd at. Here it is 🙂
A member of the Bitcoin trading club poses with Bitcoin medals at the club meeting in Tokyo.
Yoshikazu Tsuno | AFP | Getty Images
Tuition fees paid, textbooks bought … time to buy bitcoin?
According to new findings from The Student Loan Report, a website for student loan information, more than 20 percent of college students use their grant money to invest in cryptocurrencies.
The website surveyed 1,000 current college students with credit debt this month. The survey did not ask how much students were investing and many were only able to buy smaller amounts.
“I was definitely surprised,” said Drew Cloud, founder of The Student Loan Report.
“If you live on a tight budget, you’d think students would be more likely to spend that money on groceries, rent or school supplies than on Bitcoin and Ethereum.”
Undergraduate students received an average of around $ 4,600 in federal loans for the 2016-2017 academic year, according to the College Board.
A student who spends his student loans on cryptocurrencies is breaking his agreement with the government, said Elyssa Kirkham of Student Loan Hero, a student loan management website.
If you invest the student loans in cryptocurrency and lose money, you still owe the student loans.
an expert in student loans
“Investing is not an education expense, so it is against the rules to use your student loan money to buy cryptocurrencies,” Kirkham said.
Also, any gains are likely to be offset by the taxes a student would have to pay along with the fees and interest on student loans.
She suggested an alternative.
“If you end up with additional funds, you can return them through your tax office to pay off some of your debts. That is the smartest option. ”
A spokesman for the US Department of Education repeated the message: “Federal student grants may only be used to cover the cost of attending an eligible college. Investments are not considered an appropriate use of federal student grants.”
Cryptocurrencies are certainly on the minds of college students.
Digital token courses are now available at a number of colleges. At the Massachusetts Institute of Technology, students meet weekly in the Bitcoin Club. A company called Campus Coin is working to establish cryptocurrencies as a medium of exchange at universities across the country.
But there is a huge difference between learning and experimenting and risking your financial health by using borrowed money to invest in digital currency that might be gone in a few months.
“If you put the student loans in cryptocurrency and you lose money, you still owe the student loans,” said Mark Kantrowitz, a student loan expert. “And where do you get the money to pay college bills?”
Of course, college students aren’t the only ones using debt to get into cryptocurrencies.
Almost 20 percent of all people who own cryptocurrencies have lagged behind investing in them, according to a recent survey of 3,000 people by CoinDesk, a digital token information company.
“Investing with a credit card or loan is a terrible idea because these assets are extremely risky and volatile,” said Christian Catalini, an assistant professor at the Massachusetts Institute of Technology who studies blockchain technology and cryptocurrencies.
He added, “Nobody should invest an amount in this area that they cannot afford to lose right away.”
WATCH: The crypto craze has spread to college campuses
CORRECTION: A CNBC spokesperson quoted from the Student Loan Report for this article, Drew Cloud, is not a real person, according to The Chronicle of Higher Education, and has been endorsed by CNBC. In an article published April 24, the Chronicle reported that Cloud was actually a bogus entity created by Student Loan Report’s parent company, Shop Tutors, which also operates as LendEDU. For the sake of transparency, CNBC is retaining the original report published on March 23.
Comments are closed.