Many college students and graduates face a seemingly insurmountable struggle to pay off student loans. This has led to many graduates seeking job opportunities in industries not directly related to the field they have studied for which leads to frustration and job dissatisfaction. The only way to solve this issue is to pay off their debt to give them more freedom to pursue their desired career. This could take years with the current condition of employment in the US. Graduates are finding it harder and harder to make ends meet at the same time make a dent in their loans. Others have taken it a step further and have sought other means to pay off their loans. Bitcoin is the likely candidate because of its popularity and its ever-increasing value in the financial market. People have poured a vast amount of money into investing in Bitcoin and other cryptocurrencies in the hopes that its value continues to increase in succeeding years.
There are many ways to invest in Bitcoin. The easiest way is by converting traditional currencies in exchange for Bitcoins. And there are others who are involved in mining to increase their Bitcoin cache and use it for other transactions. Here are a few tips to help you pay off student loans using Bitcoin.
1. Bitcoin and taxation
Before using bitcoin to pay off your student debt, it is essential to look into the tax that cryptocurrency transaction is subject to. Normally, crypto is treated as either capital assets or income. Therefore, it’s crucial to keep track of the value of coins you purchased through an exchange as a basis for when you decide to sell it. Bitcoin held more than a year has a more favourable tax rate gain than those bought within one year.
2. Consider gift cards
First things first, there is currently no way for loans to be paid off with Bitcoin directly. Except for a few institutions that accept Bitcoin as tuition payment, you have to use a third-party service to make it possible to use Bitcoin for transactions. One such method is by purchasing gift cards using Bitcoin and then using that to make loan payments. Many sites and apps accept gift cards as payment for different transactions, one of which is paying for student loans. It’s a roundabout way of using Bitcoin to pay off student debt in a world where cryptocurrency is still regarded with hesitation and doubt.
3. Broker exchange is a good option
Third party apps can also be used to convert bitcoin into a traditional monetary exchange and use that for loan payment. Among all the different ways, this is the most straightforward because it merely involves converting bitcoin into a currency that can be used for traditional transactions. You simply have to deposit your Bitcoin into an exchange app or broker then once that is received, you can request for a fiat currency withdrawal. This is often through a bank transfer. One important thing to note is to make sure that the transaction, depositing, and withdrawal, are done under the same account to avoid breaking money laundering laws. The process usually takes around one to five days.
4. Peer-to-peer exchange
For those who don’t have the time to wait for a couple of days to complete a bitcoin withdrawal, a peer-to-peer transfer is a viable way to convert your bitcoin stock into usable currency for student loan payment. Because of bitcoin’s exponential growth in value in recent years, many people with a big trove of coins have put some of it up for sale. People interested in purchasing them can simply deposit cash into your account before you transfer bitcoin into their account. Bank transfer is also possible in exchange for coins. In both these transactions, it is important to ask for proof of identification before proceeding with the transaction.
5. Increasing your coin trove
A lot of people have focused on growing their bitcoin stock then proceeding to monetise it for traditional transactions like paying off student debt. There are some startups available online that pay in bitcoin. Small tasks are put up for auction online, and people who work on them are paid in Bitcoin. People who are adept at writing and with a fair bit of knowledge on cryptocurrency have gone on to write for news sites and blogs and were paid in Bitcoin. Another way, albeit a risky one, is through bitcoin lending, a sort of loan. From there, it is easy enough to follow the previous tip of monetising coins through a third-party exchange.
6. Consider precious metals
One very creative and convenient way of using Bitcoin or any cryptocurrency to pay for student loans is by using it to buy gold or to buy silver and then using that to pay off loans and other transactions. You must have opened a bitcoin wallet to complete the transaction. And since the value of cryptocurrency particularly Bitcoin, still fluctuates from day to day, checking the current exchange rate is also imperative. There are many sites online that accept payment in Bitcoin in exchange for precious metals. It is, however, important that the sites that sell precious metals are legitimate and trustworthy before you transfer them your coins.
7. Coin mining
Lastly, and this might require more time and effort, is by mining Bitcoin and then monetising it to pay for loans. To “mine” Bitcoin is actually another way of verifying other bitcoin transactions, the central tenet in the blockchain technology. Mining is a tricky operation. It involves custom hardware, ample power supply, and a fair bit of knowledge in cryptocurrency and IT infrastructures.
It can, therefore, be said, with the current level of debt on students and the pressure to pay off, which ultimately affect their study, Bitcoin can be a great option for relief. Follow the steps discuss above, and you will find it very useful.
Also, check out these 5 strategies to help you clear student loan.