Opinion: You Can Now Use Bitcoin to Pay for College Tuition — But Should You?

almost? Nah, it’s already here: You can pay college tuition with Bitcoin.

Bentley University, a small, business-focused private university outside Boston, allows undergraduates to pay with Bitcoin, BTCUSD and
-6.08%
Ethereum ETHUSD,
-9.70%
And USDTUSD is stable,
-0.37%.
The University of Pennsylvania Wharton School of Business is accepting cryptocurrencies for the $3,800 Blockchain Economics and Digital Assets Certificate Program. who is next?

every institution.

Accepting cryptocurrencies for payment is smart business, and Bentley and Wharton are hardly the first sellers to do so. For more than a year, 324 million PayPal users have been able to use bitcoin to pay for goods and services with 29 million businesses on the platform. Luxury retailers including Gucci and fitness club Equinox (in New York City only), accept payments with bitcoin and other digital assets as well.

Money is money, regardless of form. All the school needs is to establish processes that will enable it to accept cryptocurrencies. This is easy nowadays. Dozens of platforms make the process easier, and it’s no more complicated than accepting credit cards. Bentley University, for example, uses the platform provided by Coinbase COIN,
-26.40%And
Publicly traded cryptocurrency exchange.

But unlike cash, cryptocurrency prices fluctuate – a lot. The easy solution: sellers sell their cryptocurrency as soon as they receive it. With many platforms, this is done automatically for them.

Cafes accept cryptocurrency to look elegant. But universities have better reasons: In addition to a lot of free publicity, they will convey to potential students that they are advanced, modern, and cutting edge. School spokespersons should say: “We pay attention to the latest developments in the global economy, facilitate and promote the development and use of innovative payment systems.” “If we accept cryptocurrency as payment, just imagine how recent the classes you will be attending!”

So the decision is smart business for Bentley. But given that Bentley has an average tuition fee of $56,500 – excluding room, board, books and student fees – does it make sense for students to pay in crypto?

Well, you can only pay your tuition with bitcoin if you own some of it – and there’s no point in buying bitcoin just for the purpose of transferring it to a Bentley.

But 20% of adults in the United States own bitcoin, including a large number of high school students. Given that the price of Bitcoin has risen 40 million percent since its inception in 2009, it’s fair to say that many early adopters – some parents of seniors in high school – have become amazingly wealthy through their crypto investments. The Association of Colleges and Universities Boards Says Bitcoin will produce the world’s first trillionaires by 2030. Early (or lucky) investors have enough Bitcoin to pay tuition (and possibly school) despite Bitcoin dropping 54% of its value to an all-time high At $68,000 it was set last November.

Simon & Schuster

But be aware: paying to attend college with cryptocurrency may result in you being taxed.

You see, the IRS says bitcoin is proprietary. This means that using it to pay for goods and services is the same as selling them and converting them into dollars and using transferring dollars to the seller. In other words, paying tuition fees in bitcoin is the same as selling bitcoin – this is a capital transaction. If the price of bitcoin is higher than the price you paid for it, you will get capital gains and owe taxes at the capital gains tax rates. On the contrary, if the price is lower, you will experience a loss of capital.

Let’s say you bought bitcoin for $10,000 and it was $38,000 on the day you transferred it to Bentley. This gives you a capital gain of $28,000.

This is the same situation you would encounter if you sold stocks, bonds, mutual funds, ETFs, real estate, baseball cards, or artwork to pay tuition (unless your money is in a 529 college savings plan — but that’s a topic for last day).

Paying major expenses with digital assets — homes, cars, and yes college tuition — will become increasingly common. Bentley University is among the first universities to allow this, and every other institution of higher education will soon join it.

Rick Edelman, author ofThe truth about encryption; A practical and easy-to-understand guide to Bitcoin, Blockchain, NFTs, and other digital assets“.

More about cryptocurrency

Mark Cuban: “Cryptography is going through the lull that the Internet has been through”

I am a financial advisor, and would not encourage you to put bitcoin into your 401(k)

Crypto enthusiasts sniff at Buffett, Munger comments on Bitcoin. “It took decades before they decided to invest in Apple,” says one analyst.

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