Bitcoin is so popular that students are taking out loans to invest, and they may regret more than just wasting tuition fees

How attractive is Bitcoin ? It is so attractive that more than 20% of students use their student loans to invest in it. But experts say this is a dangerous move and a very unwise behavior.

Investing in Cryptocurrency with Student Loans? Beware of Regret

More than 20% of college students have used some of their student loans to invest in cryptocurrencies, according to Student Loan Report, a student loan information website that surveyed 1,000 college students this month. The survey did not ask students how much they spent on cryptocurrencies, and many may have only purchased small amounts of digital currencies .

Drew Cloud, founder of the Student Loan Report, said he was surprised that students made such a move. FX678 reported that with tight budgets, people thought that students would spend money on groceries, rent or school supplies instead of buying Bitcoin and Ethereum.

The average amount of federal loans taken out by undergraduates during the 2016-2017 school year was about $4,600, according to the College Board.

Elyssa Kirkham, who runs the Student Loan Hero website, said that if students spend their loan money on cryptocurrencies, they are violating their agreement with the government. In addition, any gains from trading cryptocurrencies may be offset because the loans are subject to tax and interest payments.

A spokesperson for the U.S. Department of Education said: "Federal student aid funds should only be used to defray the costs of attending an institution of higher education. It is not appropriate to use them for investments."

Many college students are into cryptocurrencies these days. Courses on digital tokens are now offered at many universities. At MIT, students meet weekly in a Bitcoin club. But college students who borrow money to invest in Bitcoin can make their finances risky.

It is possible that the money paid for tuition will be wasted.

“If students use the loans they get to invest in cryptocurrencies, then if they lose money, they’ll lose more money, and where will they get the money to pay for tuition?” said Mark Kantrowitz, head of Fastweb.com, a student loan website.

To be sure, students aren’t the only ones taking out loans to buy cryptocurrencies. According to a recent survey of 3,000 people by Bitcoin media outlet CoinDesk, nearly 20% of all cryptocurrency holders borrowed money to buy Bitcoin.

Christian Catalini, an assistant professor at the Massachusetts Institute of Technology who studies blockchain technology and cryptocurrencies, said investing in loans is a terrible idea because these assets are extremely risky and volatile. He added, "No one should invest in this area because the cost of losing everything is too high."