There’s been a lot of public conversation about student loan debt over the last decade or so, and for a good reason.
According to information from College Board, the Federal Reserve, and the Saving for College organization, nearly 55% of all bachelor’s degree students have taken out student loans – with many of them receiving their diploma alongside tens of thousands (if not hundreds of thousands) of dollars in debt.
Student debt in the United States has already hit $1.75 trillion, and the rate of student loan debt is growing six times faster than the entire country’s economy.
Many people (future, current, and former students alike) are trying to figure out how to “crack this code” and get out from underneath debt that can sometimes feel insurmountable.
Can crypto help?
The Average Student Loan Situation in the US Today
Right now (early 2022), more than 43.4 million people in the US are carrying federal student loan debt – and that’s not even counting the people who have state or personal debt that they’ve taken on to help them get through school.
On average, students graduate with $37,113 in debt at the federal level. However, researchers believe that number is much closer to $50,000 when you add in the private loan debt most students take to get their bachelor’s degree.
Combine this with the fact that somewhere between 40% and 50% of all students are also going to take on even more postgraduate education debt, and you’re looking at a very sticky situation here.
It’s not at all uncommon for someone to graduate college between 22 and 24 years of age and already have close to a hundred thousand dollars in debt under their name – and that’s before they even join the workforce in their chosen career field.
It’s no surprise that students with loan debt are using tools like this one to try and figure out just how long it will take them to pay this debt down.
It’s also no surprise that many of them are looking for alternatives to the traditional path to debt repayment to speed things up (even just a little bit).
That’s where crypto comes into play.
Can Crypto Be Used to Pay Student Loans?
A study released by The Student Loan Report in 2020 showed that 1/5 of all current university students with loan debt planned to use cryptocurrency (and other digital assets) to pay down their loans faster.
Some students are taking out other loans to invest in the crypto markets, especially since these asset classes have seen their values skyrocket over the last decade.
Many students have been successful at wiping away their student loan debt with this kind of approach. However, many others have found out exactly how volatile cryptocurrency markets are and have found themselves in stickier financial situations.
It’s also important to realize that no major universities accept crypto as a form of payment for these loans.
Holdings in crypto like bitcoin need to be turned into traditional currency – US dollars – before these loans can be paid off. This might change in the future (more and more mainstream operations are accepting cryptocurrency), but right now, that’s the lay of the land.
Students that go down this road have to be able to:
- Fund their cryptocurrency accounts without taking on a tremendous amount of debt
- Time the cryptocurrency market correctly and
- Cover any potential tax bills attached to that investing
… And only after all of that has been taken care of with they be able to pay down their student loans using their crypto funds.
If your student loans become unmanageable, crypto may not be the answer. Instead, you’ll probably want to look into refinancing your loans to something more manageable – a calculator like this can help you figure out what that would look like!