Can Investing in Bitcoin Help Pay Off Student Loans?

Under the Biden administration’s student loan debt plan, if an American has received a Pell Grant while in college, he or she is eligible for up to $20,000 in debt relief. While for students who did not receive Pell Grants, Biden announced to forgive debts up to $10,000. However, the waiver applies only to those whose income is less than $1,25,000.

Opinion is divided on forgiveness for US student loans, which are the second-largest category of consumer debt in the country and compete with mortgages, which have peaked in lending.

Since Biden announced the student loan relief plan, Republicans have challenged the measure. While some states in the US plan to tax student loan forgiveness. If that’s not enough, fraudsters have already started making most of the announcements by calling borrowers and tricking them into paying for loan cancellations, according to reports.

Currently, there are more than $1.7 trillion in US student loans.

Lokesh Arora, CEO of Study24x7 said, “Approximately 43 million Americans have federal student loan debt as millions of students in the U.S. choose loans as an avenue for education. According to the data, student loans are the second largest category of consumer debt in the country, after mortgages. Currently, the U.S. student loan debt of more than $1.7 trillion, which is more than credit card debt and mortgage debt combined. According to the reports, the White House estimates that its debt relief plan could lead to about 20 million borrowers getting their debt completely wiped out.”

How does Bitcoin come into the picture?

Soon after Biden announced the student loan forgiveness plan, it was the talk of the town across the country. Many wonder if this forgiveness can actually provide the much-needed relief to borrowers. However, cryptocurrency netizens believe Bitcoin could be the solution instead of forgiving a certain amount of student loans.

Last month, Dennis Porter, CEO and co-founder of the Satoshi Act Fund, tweeted “instead of forgiving $10,000 in student debt, Biden should have given each person $10,000 in Bitcoin, locked for 10 years in a smart contract that pays off their remaining student loan balances when released.” His tweet was debated by Twitterati with some agreeing with Bitcoin as the solution, while some did not find the biggest cryptocurrency to be the wise alternative.

Can Investing in Bitcoin Really Help With US Student Loan Repayment?

Ashwani Kumar, CEO and Founder, HelperWorld explained for a fixed rate student loan, the returns are clear; this can be positive to use loans. For example, let’s say you leave college owing about $37,000 in student loans. At a fixed rate of 6.8 percent, repaying these loans over five years instead of 10 will reduce the total interest you pay from $14,096 to $6,749. These savings are concrete, and you can calculate them before you borrow anything.

“These numbers get worse for investments, which involve risk. Your investment can gain value, but it’s also possible to lose some or all of what you invest, especially with something as volatile as cryptocurrency,” Kumar added.

On Bitcoin as the solution, Abhijit Shukla, CEO and Director, Tarality, said: “It’s nice to think of Bitcoin as a solution to the problems surrounding the current financial system, but the only way Bitcoin would even come close to minimizing this the shortfall would be if universities/colleges largely accepted Bitcoin for tuition after the US government accepted Bitcoin as a loan repayment.”

So “Bitcoin” by itself cannot solve the student debt crisis, unless the current students have enough disposable personal income to invest and take the risk in Bitcoin. Since they don’t (hence 1 million people per year in America who default) they remain both in debt and short of any investment, Shukla added.

The nature of the cryptocurrency market is very sensitively driven and they are more risky compared to other market related instruments. However, the demand for cryptocurrencies remains consistent. Currently, the global crypto market has cleared $1 trillion.

According to CoinMarketCap, at the time of writing, the market cap is around $933.14 billion down 1.21% on Saturday compared to the previous day. However, the total crypto market volume has increased by 2.2% to $61.31 billion.

Bitcoin has pulled back from the $20,000 mark and is trading on a bearish tone. The largest crypto is available at around $19,800 with a market cap of $379 billion. It has fallen by 2% in 24 hours.

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