Following the boom of Bitcoin, many are scrambling to get on board before the cryptocurrency skyrockets. For students, this means that they are investing their student loans and throwing it into securing a bit here and there. In fact, Investopedia reports that 1 out of 5 students have done so and used the money meant for their education and living expenses, to gamble away in cryptocurrency - a volatile market at best.
Students are accepting of cryptocurrency because they understand the power of a digitized society. They are much more exposed to the use of technology and believe that cryptocurrency is the future. However, Is this a wise decision? Will it pay off in the long run or will it create more trouble than it is worth?
Cryptocurrency investments are akin to gambling
As with any form of investment, there are risks involved in investing in cryptocurrency. Back in 2017, it might have been a promising investment, but Bitcoin has dropped 60% in 2018 and has fluctuated ever since. There is no sure-fire way to ensure that there is a financial gain off every investment.
Delegating assistance for rent and food
By putting money away into cryptocurrency, students are essentially stretching their already tight budget. If one is determined to invest in cryptocurrency, perhaps it’s also apt to get a part time job, and pay off the sum that they’ve borrowed for cryptocurrency.
Use excess money to pay off your loans
Professionals maintain that if a student has excess leftover from their student loans, they should take that money and pay it back to cancel out some debt is the wisest choice. However, students might not view it that way. Having additional money on hand which might help them gain more money, doesn’t seem like such a bad option. Although, they should consider the taxes and interest rates that the student might incur both from the investment and their student loan. Their earnings, if any, might be cancelled out by these unforeseen expenses.
Invest in a high-returns savings account
Instead of putting the money in a bid to earn more, financial institutions advise students to put that money in a bank account instead. The interest rates might be low, but it’s stable and safe.
As there are no rules in place forbidding students from using the funds for their own gains outside of school, it has turned into a trend. Furthermore, many students do not have access to financial stability and are largely unable to buy crypto with credit cards, which is why they have resorted to using their student loans instead.
It is important for students to understand the risks involved and up to them to do their research prior to investing their money anywhere they see fit. The payoffs might be huge, but in the event their investment fails, they will be short of cash and might even need to drop out of college without a degree, and with a huge debt to settle on top of that.