21.2% of university students use financial aid to buy crypto
Most major credit card issuers have banned cryptocurrency purchases, but that isn’t deterring college students.
A recent poll by US-based The Student Loan Report found that more than 1 in 5, or 21.2 percent of university students use their educational loans to invest in cryptocurrencies.
It’s a risky strategy that could either leave them in more debt than ever or completely student loan free.
The following chart illustrates their responses:
Over 1.4 million university students turn to private loans to finance their education in the United States.
The majority of those loans are federal grants.
With interest rates set to rise, they may end up paying back more money than they originally planned.
Students usually get access to cash loans because lenders send excess funds once courses are paid for.
The money is supposed to go toward living expenses.
Investment-savvy young adults, however, are instead investing the funds into a potentially higher-returning asset.
The report only mentions bitcoin, Ethereum, Ripple and more, and it wasn’t a requirement to specify which crypto they bought.
Should lenders realise students are buying cryptocurrencies with their loans, they could impose tighter controls.
Until JPMorgan, Bank of America and others issued a ban in February, consumers were freely using their credit cards to invest in Bitcoin.
According to CNBC, nearly 20% of Bitcoin investors were making their purchases with a credit card prior to the ban, as per LendEDU.
Blockchain veteran Wences Casares, advised PayPal’s Dan Schulman on cryptocurrency investing, saying:
“The main way in which bitcoin could fail is if we begin to put into bitcoin money we cannot afford to lose.”