Bitcoin is springing back from a downward spiral that saw a 7-day low of $7,108, according to WorldMarketCap. At time of writing, Bitcoin is trading at $7,716.
Meanwhile, student loan rates are rising and those indebted are taking on larger loans. The new loan rates will take effect on July 1, with undergraduates paying an interest rate of 5.04% on new Stafford loans instead of 4.45%. The rate adjustment for graduate students taking on direct loans is 6.59%, up from 6%. For parents who help their children, the rate will be 7.59%, up from 7%. Caps have been set for all three types of loans at 8.25%, 9.5% and 10.5%, respectively.
The rate hikes are spurring Millennials to question bankers who raise rates. They’re also considering the sustainability of an economic structure that is leaving them broke.
Says Jeremy Gardner, a managing partner at Ausum Ventures, “As a millennial, I personally put much greater faith in scarce digital assets that are determined by math and auditable code, rather than a group of bankers at the Federal Reserve.”
The total US student loan debt now stands at $1.48 trillion, spread out among 44.2 million Americans. Towering over the $1.03 trillion balloon created by credit card debt, the student loan crisis has gripped the country’s Millennials with an average payment of $351 per month for borrowers aged 20 to 30 years.
When Millennials look at one another – the class branded as ‘entitled slackers’ – they’re staring at a group of people on the cusp of their careers, with college and graduate degrees, saddled with debt.
The delinquency rate for borrowers who are 90+ days late on their payments or who have defaulted on their loans stands at 11.2%. The burden is rippling out in a number of ways. When nearly 5 million borrowers are unable to make their payments on time – and for every borrower who is honoring payments – economic ease, financial freedom and security become non-existent. Hard work ethics and long hours aside, and despite how individuals are coping with mile-high debt, Millennials are delaying traditional milestones like buying a first home, getting married and having children.
But they’re investing in cryptocurrencies, particularly Bitcoin and Ethereum, as digital assets that can show long-term returns and are unable to be manipulated by the Federal Reserve.
A recent study by Finder reveals that Millennials are the leading generation for interest in cryptocurrencies. Finder commissioned a survey of 2,001 American adults. Of the adults surveyed, 7.95% reported the purchase of a cryptocurrency.
Who owns crypto? Percentage of each generation:
Millennials – 17.21%
Gen X – 8.75%
Baby Boomers – 2.24%
Who owns crypto, men versus women:
Mean – 11.86%
Women – 4.27%
Of those who have not bought any crypto, who plans to buy in the future? Percentage of each generation:
Millennials – 11.52%
Gen X – 10.30%
Baby Boomers – 3.81%
Own no crypto and not interested in buying in the future. Percentage of each generation:
Millennials – 37.36%
Gen X – 35.05%
Baby Boomers – 45.62%
Currently, Millennials are spending roughly 45% of their income on rent, leaving barely enough money for food, clothing and toiletries. According to new research by Rent Cafe, the youngest of the generation, ages 22 to 29, are coughing up a median rent total of over $97,000 in an 8-year span.
In a bare-minimum paradigm, 20-somethings are the group driving Bitcoin and cryptocurrencies as the road to a new alternative digital economy. Their skin in the game is epic debt and little-to-no disposable income.
As cryptocurrencies become more widely accepted, opportunities will emerge for all sorts of transactions generating alternative forms of income to help make ends meet. Decentralized mechanical turks projects that pay in crypto, for example, such as Gems or Earn.com, are trying to drive a gig economy that is based on online work. Emerging decentralized platforms such as Steemit are also generating small amounts for content creators.
While alternative payment options can’t resolve real-world debts, they illustrate how money is being reinvented and how cryptocurrency’s underlying blockchain technology is reducing burdensome and costly processes. Students are the ones who have a vested interest in the success of a new digital monetary system that can eliminate middlemen, redundant verifications and complex procedures, because they’re the ones paying the ultimate price with enormous debt they can’t afford.