Can You Pay College Tuition With Crypto?

Starting next January, the Wharton School of Business at the University of Pennsylvania will offer a six-week online certificate program in the “Economics of Blockchain and Digital Assets.”

While that’s not particularly newsworthy — a number of universities offer courses and programs in cryptocurrency and blockchain — what did make headlines is the school’s willingness to accept tuition payments for the certificate in the form of Bitcoin, Ethereum, and other cryptocurrencies.

Penn, it seems, is walking the (Locust) walk, joining a short list of U.S. colleges — including King’s College in New York City, a religious institution, and California Intercontinental University, a for-profit school — accepting digital currency as tuition payment.

The university is partnering with the crypto exchange platform Coinbase to convert payments into U.S. dollars. Reed Cataldo noted that at current market prices, Penn’s $3,800 tuition fee for the certificate program equals less than one Ethereum token. Cataldo is one of the course administrators and a founding partner of Prysm Group, a blockchain consulting firm that helped design the program.

Cataldo hinted Wharton might soon accept cryptocurrency payments for other academic programs, though university spokesman Ron Ozio told BestColleges that as far as he’s aware, the blockchain certificate is the only Penn program accepting crypto for tuition payments.

While it’s difficult to speculate about broader adoption across higher education, what’s not in question is the future of cryptocurrency itself.

“Blockchain and digital assets are not going away,” said Wharton professor Kevin Werbach, academic director of the certificate program.

Accepting cryptocurrency payments for tuition is still rare among colleges worldwide, and, naturally, is a rather recent phenomenon. In 2014, King’s College became the first U.S. college to take crypto payments for tuition. A year before, the University of Nicosia, a private institution in Cyprus, began allowing students to pay tuition with Bitcoin.

Since then, the practice hasn’t exactly caught fire. Outside the U.S., these other schools are known to accept cryptocurrency for tuition:

Until now, the colleges that have leapt into the crypto fray aren’t exactly household names, which makes the Wharton announcement even more meaningful. Will more American universities follow suit?

Folks at Bitcoinist.com certainly think so.

“Colleges interested in growing will ultimately begin to view Bitcoin as a viable payment option for incoming and existing students,” the site said in a press release.

As colleges continue to cautiously dip their toes in the crypto waters, some holders of Bitcoin and other digital currencies are equally skeptical of using these assets to fund their education. Still, stories of students using profits gained from crypto transactions to pay tuition do crop up from time to time.

The main reason students might hesitate to pay with crypto is the way the currency is structured. It’s more like stock than cash, explained Alex Wilson, co-founder of The Giving Block, a firm that helps colleges and other nonprofits form strategies around accepting cryptocurrency.

“It’s not practical or common to use crypto to buy things,” Wilson told BestColleges. “It’s more common to donate it than it is to transact in it. Part of that is for tax reasons. You wouldn’t use your Apple stock to buy a cup of coffee or pay for your groceries because you’d be creating a taxable event. Donating it is the exception, where it’s actually helping you financially with your taxes. So most people with crypto don’t want to spend it unless there’s a financial incentive.”

Wilson said stablecoins represent an exception to that rule, which may have significant implications for higher education. Stablecoins are a form of cryptocurrency designed to maintain a stable price over time with a fixed exchange rate, thus eliminating the volatility so prevalent in the crypto market.

As an example, one form of stablecoin is USD Coin, a digital currency that will always equate to one dollar and fluctuate in value according to the dollar’s purchasing power. Like Bitcoins, stablecoins are minted through blockchain technology.

Paying for goods and services with stablecoins is still a taxable event, however, because the IRS considers it a sale or exchange of an asset, which is subject to capital gains tax. Yet if the stablecoin is pegged to the dollar at a 1:1 ratio and the capital gain is zero, no tax is owed.

Every day, billions of dollars are transacted using stablecoins, Wilson said.

“I think stablecoins will become more common for things like tuition because that wouldn’t be a taxable event,” Wilson said. “It would just be like spending dollars.”

Wilson believes the use of cryptocurrency within higher education will soon be commonplace.

“Already, there are over 200 million people worldwide using crypto,” he said. “It’s growing faster than the Internet did in the 1990s.”