"With a 1.7% Annual Rate, Should You Just Borrow and Invest?" University Students Engage in 'Debt Investing' with Student Loans

The Perception of "Low-Interest Loans as Investment Funds" Spreads on Social Media

Spike in Cases of University Students Investing Living Expense Loans

Student Loan Supply Reaches 850 Billion Won

Recently, there has been a growing trend among university students to use low-interest funds, such as student loans or living expense loans, to invest in stocks or virtual assets. Although these programs are intended to support academic pursuits, more students are using them as investment capital, which goes against their original purpose. Nevertheless, this practice is spreading due to gaps in monitoring and oversight.

According to the Korea Student Aid Foundation, the provision scale of living expense loans increased from 545 billion won in 2021 to 850.6 billion won in 2025. During the same period, the amount of overdue living expense loans also nearly doubled, rising from 19.2 billion won in 2021 to 38.7 billion won in 2025. The Asia Business Daily

On March 17, Yonhap News highlighted the phenomenon of so-called "debt investment" among some university students, where they invest in stocks or virtual assets using relatively low-interest loans. According to the report, a student surnamed Lee (age 25) invested in virtual assets last summer by combining 2 million won in living expense loans with money earned from a part-time job. After hearing that peers had made several million won by investing loan money, Lee decided to try "debt investment" (investing with borrowed funds). However, the outcome was the exact opposite. When the price of virtual assets plummeted, Lee lost about 70% of the investment. Lee is now working short-term shifts at a logistics center to repay the loan.

Another student, Kang (age 23), also jumped into investing in 2021, when the virtual asset market was surging. Kang said, "Seeing stories on social media and YouTube about young people earning large sums of money gave me vague aspirations," adding, "After completing my military service, I considered student loans, with their low interest rates and long repayment periods, as a financial tool for investment." Kang is currently investing his student loan funds in an exchange-traded fund (ETF) that tracks the US S&P 500 index. In another case, Cho (age 21) used part of his student loan to invest in gold-related assets and earned about 1.8 million won in profit. Cho said, "With an annual interest rate of 1.7%, I can borrow up to 2 million won per semester," and added, "I thought even simply putting it in a savings account would yield an interest margin." He also noted, "Among my peers, investing using student loans is becoming increasingly normalized."

Increasing Student Loans... Overdue Amounts Also on the Rise

Scholarship loans from the Korea Student Aid Foundation are divided into tuition loans and living expense loans. Living expense loans are provided to support costs necessary for academic activities, such as housing, food, and transportation. As of this year, students can borrow up to 2 million won per semester in living expense loans. However, the scale of both loans and overdue amounts is increasing.

Scholarship loans from the Korea Student Aid Foundation are divided into tuition loans and living expenses loans. Living expenses loans are provided to support costs necessary for academic activities, such as housing, food, and transportation. The Asia Business Daily

According to data provided by Assemblyman Kim Youngho's office from the Korea Student Aid Foundation, the provision scale of living expense loans increased from 545 billion won in 2021 to 850.6 billion won in 2025. During the same period, the amount of overdue living expense loans also nearly doubled, rising from 19.2 billion won in 2021 to 38.7 billion won in 2025. On online investment communities, it is easy to find advice encouraging the use of student loans for investment. For example, one comment on an investment forum post read, "If you can borrow at an annual rate of 1.7%, take it without hesitation and invest."

Debt Investment Spreading Beyond University Students to Retail Investors

This trend is not limited to university students; it is also appearing among general individual investors. On domestic portal investment forums and online communities, questions such as "Is it a good idea to invest using wedding funds or retirement pay?" are posted nearly every day. As a result, the scale of "debt investment" has grown to an all-time high.

According to the Korea Financial Investment Association, the outstanding balance of individual investors' credit transactions has recently exceeded 33 trillion won, marking an all-time high. Compared to about 18 trillion won a year ago, this figure has increased by approximately 87%. The Asia Business Daily

According to the Korea Financial Investment Association, the outstanding balance of individual investors' credit transactions has recently exceeded 33 trillion won, marking an all-time high. Compared to about 18 trillion won a year ago, this figure has increased by approximately 87%. Experts are particularly concerned about the increase in leveraged investments among young people. Kang Sohyun, Senior Research Fellow at the Korea Capital Market Institute, told Yonhap News, "People in their twenties have a high risk appetite, so they also tend to favor leveraged products," adding, "In highly volatile markets, losses can be much greater than expected returns."

Kim Sangbong, Professor of Economics at Hansung University, also emphasized, "I advise university students not to take out loans for investment," adding, "It is better to gain experience by investing with surplus funds." Both experts stressed the need for financial education that distinguishes between investment and speculation, and promotes a long-term approach to asset building.

This content was produced with the assistance of AI translation services.