Essential Facts About Paying for College with Crypto — What You Need to Know
Cryptocurrency is genuinely a product of our age. The digital revolution and the connected world are some things without which there would be no cryptocurrencies. A digital currency is something that would leave even tech-savvy Americans bewildered even 10 to 15 years back. Back to the present day, crypto, as cryptocurrencies are fondly called, is everywhere. In fact, some experts expected crypto the de-facto currency due to potential financial breakdowns resulting from the COVID-19 and the resultant lockdowns. Though that is not exactly how things played out, people turned to crypto in more significant numbers. People no longer even ask if you can use bitcoin to pay for things as the numerous bitcoin-enabled payment modes on many e-commerce sites have made the question outdated.
Everybody from professional investors to young adult students everybody is interested in investing in crypto. The financial value of Bitcoin, the most popular cryptocurrency, surged to an all-time high of USD 50,000 last February. With the weight of potential education loans looming over their shoulders, students are increasingly looking forward to paying for college with crypto. It would lessen the financial burden and let them make the most of their investment. They no longer ask can you pay for college with bitcoin but whether particular colleges allow paying for college with crypto.
Youngsters not only use Bitcoin for paying for college with crypto, but a large number of them spend a portion of their student loans to invest in crypto. In fact, according to one source, 20% of students use a part of their student loans to buy crypto. Read on to know more about how crypto, college, and student loans all add up in the life of today’s youngsters, as per a particular study by College Finance.
The Approach Towards Investing
Experts advise youngsters to start saving early, as soon as their twenties, even if it is a small amount like $100. The money they save is of lesser importance than the age they start picking up the habit. Making saving a practice early on goes a long way in ensuring that an individual enjoys a financially secure and stable life. It need not be mentioned that student loans are not the preferred source of money for crypto investments, and thankfully only 5% of the study respondents practice it. They revealed that in terms of funding source popularity for investments, it is as follows:
· Savings
· Income
· Allowance
· Stimulus checks
· Inherited money
The stock market still remains the most popular investment option, followed by cryptocurrencies and ETFs. However, Robinhood has acquired massive popularity as the investment platform of choice. The study revealed that most young investors use it. Robinhood saw its user figures peak during the pandemic, which has now subsided somewhat to take the shape of an endemic.
Cryptocurrency and Students
It is for sure that a large number of young people invest in cryptocurrencies, but the question mark which looms over the fact lies in the specifics. The study we are discussing here found that 53% of present college students are cryptocurrency investors. In comparison, 46% of former graduates who completed their courses in the recent past do the same. Again, the majority of young investors rate their crypto investments to be moderate to moderately risky. The good news is that aggressive crypto investors are more likely (20%) to have chalked out an investment strategy. The study noted that a whopping 90% of the survey participants did not take the counsel of a financial advisor.
Further existing students were more interested in adding to their crypto investment portfolio. The most popular investment crypto options are as follows in descending order:
· Bitcoin
· Dogecoin
· Ethereum
· Litecoin
· And Stellar
The average profit that students made from their crypto investments stood at 44%.
They Think Long Term
A whopping 62% of present college students have invested in crypto with long-term goals. It is interesting to note that almost 25% of student crypto investors are thinking about pursuing a finance-related career. One should note that only 7% knew that their respective colleges had classes on cryptocurrencies. In comparison, 44% reported that their colleges offered no such education. Less than half of the students who knew that their colleges offered cryptocurrency classes actually took them.
Why Students Believe Paying for College with Crypto Will Help
As evident from the information presented above, young people are more willing to invest in crypto. Crypto’s popularity as an investment instrument, including an option for paying for college with crypto, is for several reasons. Now, we will go through the most important of them in brief:
ROI (Return on Investment)
Students and recently graduated young people find choosing from the options of investing or paying off college loan debt to be a tricky decision. And indeed, it is a situation where you need to make the most of your financial brains and keep in mind the importance of saving for the future. Your primary concern that should drive your decision in such a decision is the returns you get once you have paid off your tax dollars.
It is really a no-brainer that the sooner you pay off your college debt, the less interest you pay and the more you save. And remember the old adage- money saved is money earned; it is pretty accurate. You need to have key loan figures like interest rates, loan terms, and pre-payment penalties figured out for your financial well-being. It will help you decide correctly regarding your student loan.
However, when you invest, usually there is risk involved too. Cryptos promise handsome returns at the cost of a high amount of volatility. Such volatility translates to a greater probability for you to lose money.
We can cite the example of Bitcoin itself; its cost fluctuated between $7000 to $50,000, all within a couple of years. So it promises the handsome gain of investing $7000 and getting $50,000 in returns within a few years. But that also means investing in Bitcoin at its $50,000 price might lead you to lose considerable money should prices fall drastically, something which frequently happens in cryptos.
For college students that investing in bitcoin from your college loan payment or savings account could mean you lost most of your money. Worst of all, you would still need to pay off your tuition bills and student loans.
Think Long Term and Avoid Selling Low
Most people are wary of taking such risks, especially if significant investments are involved. But students are only too ready to take a shot at fortune with their piggy-bank savings or other available funds. The potential gain makes the risk worth to a large number of such students. In the example cited above, the $7000 price of bitcoin was still significantly higher than its price only a few years back.
And as per expert predictions, Bitcoin is near its $60,000 value. So if you sell your $7000 bitcoin investments at that price, it does translate to a handsome gain and a better alternative to students for paying for college.
But students need to be wary of panicking and selling low while investing in cryptos. Trust me, you don’t want to be the infamous guy who bought two pizzas with 10,000 bitcoins back in 2010. Should had he been more sagacious, he would have been a multi-millionaire today. Let’s just hope for the soul of the guy that the pizza was tasty enough!
Perhaps the best and relatively option open for students is to invest moderately in cryptos, then go ahead and take a student loan. That will let them pay off the debt at a convenient price point of their cryptocurrency investment.
Appendix
List of Colleges Where It’s Possible Paying for College with Crypto
· King’s College
· ESMT Berlin
· University of Nicosia
· University of Cumbria
· American University of Paraguay
· Lucerne University of Applied Sciences
· FPT University of Vietnam
