Students Could Save 17% on Loans by Paying with Bitcoin
A new service plans to help students use Bitcoin to reduce their student debt by as much as 17%. Brawker, in combination with Tuition.io, is offering tuition gift cards to students.
The student debt crisis in the United States has reached epic proportions. The average student loan debt is approaching US$27,000 per student, and totals more than US$1 trillion over all. The problem is apparently not the loans themselves, but rising interest rates.
Brawker was founded in 2013 and allows users to not only buy gift cards on websites such as Amazon.com, but also to pay bills and even pay traffic tickets using Bitcoin. The company says that its mission is to eventually allow users to live completely free of fiat currency. Brawker allows users to sell Bitcoin at a markup, or to buy it without having to go through an exchange such as Coinbase.
The new service for students allows users to post Bitcoins in exchange for a Tuition.io gift card. The cards are limited to US$500 and come with a 6% credit card processing fee of US$30, but users can buy the card for US$441, which amounts to a 17% savings.
There are no account requirements for going through the process, but there are five steps. If you are using a credit card, you will be required to provide your credit card information. Once you buy your coins, you can exchange them with someone who wants a gift card for Tuition.io. This allows prospective students to buy Bitcoins from Brawker and then trade them for a gift card from Tuition.io. The markup they get when they sell the Bitcoins for the card is the savings they receive when they pay their tuition.
This service is apparently not for everyone though. One reporter at Cryptocoinsnews tried to use the service with some of his loans and found that not all loans will qualify. This is apparently true of loans obtained through Sallie Mae, one of the major state and federal loan servicers in the United States. When he tried to use his gift card with Tuition.io, the site did not show a record and he was forced to redeem it through an email link.
Brawker, Tuition.io, and alliances such as this are quite new and there is plenty of room for improvements and competition in the future. Regardless of some difficulties, the idea of saving as much as 17% on tuition is an attractive proposition to many students in the United States. Banks borrow money from the Federal Reserve at less than 1% and then make loans to students at between 4.66% and 7.21%. Many students end up working in areas that have little to do with the degree that they earn, and many even move back in with their parents when they cannot afford their huge interest payments.
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