Students Use Your Money to Invest in Cryptocurrencies

I have issues with our federal student loan program. But this wasn’t one of them. Until now that is.

From Investopedia:

According to a study by The Student Loan Report, over one-fifth of current university students with student loan debt indicated that they used their student loan money to invest in digital currency such as bitcoin.

The student loan news and information website found that 21.2% of the 1,000 students they surveyed indicated that they used their borrowed cash to gamble on the highly volatile digital currency market. While school administrators may look down upon the practice of using borrowed funds for non-school expenses, Student Loan Report indicates that there are currently no rules against it. College students are able to use loans for “living expenses,” a flexible category that covers a wide range of potential necessities.

I wonder if any of these risk takers will be unable to complete their studies because of their investment losses. Probably, but we may never know.

All of these student loans are funded by money borrowed by your federal government. In other words, you, the taxpayers, are on the hook to repay those borrowed funds if the student-borrowers fail to repay their student-loans. Not surprisingly, student-loans have a high default rate, meaning the lender (the U.S. Government) has to absorb the losses. It appears those losses may be increasing due, in part, from the risky investments made by the students in cryptocurrencies.

It will be interesting what effect, if any, stories like this one have on the student loan program. The main beneficiary of the program is the colleges, who would be compelled, without the program, to run more efficient operations and keep tuition low. In other words, the student-loan program is an indirect subsidy of the colleges.

There are better ways to assist needy students with a college education. Yet, at this time, I haven’t seen any political support for pursuing any of them. So it looks like taxpayer money will continue to be used for dubious purposes.

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