More than one-fifth of college students are using student loans to buy cryptocurrency: study

A recent study showed that more than 20 percent of college students are risking some of their student loan money to invest in cryptocurrency.

The survey, conducted by the Student Loan Report, posed one question to 1,000 college students over the course of four days earlier this month. The students were asked: "Have you ever used student loan money to invest in cryptocurrencies like Bitcoin?"

According to the results, 21.2 percent of college kids have used some of their student loan money to purchase cryptocurrencies such as Bitcoin, Ethereum’s Ether, Ripple’s XRP, and others.

How are they using student loans to buy cryptocurrency?

Student loan money isn't used exclusively for tuition. Many college students have loans that help cover their "living expenses," or they borrow more than they need and end up receiving a refund at the end of the semester, which students can use at their discretion.

Apparently, a large number of students believe investing in virtual money is a smart use of those funds and could possibly help them pay off student loan debt.

But it's a risky investment. While Digital currencies were a hot trend in 2017, many have lost significant value since the beginning of the year. For example, in December, Bitcoin peaked at more than $19,000. Now, it's trading below $8,000.

Is it legal to use student loans to buy digital currency?

Using student loans to buy cryptocurrency isn't allowed, according to regulations set by the Department of Education.

The regulations state that loans for living expenses must be related to education, Forbes reported.