A recent survey has revealed that over 20% of college students have not been using their student loans for their studies. Instead, they have been using their financial aid to invest in the crypto market. According to results published by The Student Loan Report, 200 students out of 1,000 revealed that they have used some of their student loan money to invest in crypto.
Drew Cloud, the founder of The Student Loan Report said;
“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 collect student, your budget is thin and that extra money could be used on rent, groceries, or books.”
There is a lot of uncertainty surrounding the legality of doing this, as investing is not an educational expense, thus going against what the student loan is for. A spokesman for 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.”
The volatile price of crypto, and ICO numbers could look very appealing to students, who are notoriously short of money. However, it is what makes them appealing that also makes them a huge risk for students.
Whilst the survey did not actually state how much of their student loan was being invested, one MIT professor, hopes that is was not a large amount, saying;
“People should not invest a single dollar in this that they can’t afford to lose immediately. If some of these students have been successful at shortening their loan or something else, I think it’s important to realise that might have been a random, lucky draw…There is a new generation of consumer that tend to have no faith in traditional financial institutions, and I think they are approaching this asset with curiosity and excitement.”
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