Students using low interest policy loan to invest in stocks sparks debate

“Max it out.”

This was the blunt advice given in a viral post on X that has drawn 2.3 million views and more than 2,500 reposts, urging students to take full advantage of low-interest rate loans while they still can.

“Where else are you going to get a 1.7-percent interest loan as a young adult?” the user Doll_Mock wrote. “Spend it however you want, whether that’s eating, having fun or investing.”

Elsewhere on the platform, another user, who was planning to take out a student loan, asked for help in choosing between two options: “Should I take 500,000 won ($336) now to buy ETFs (exchange-traded funds) and invest the remaining 1.5 million won when the semester starts, or take the full 2 million won loan at the start of the semester and invest it all at once?”

A growing number of university and graduate school students are tapping low-interest policy loans to invest in stocks and cryptocurrencies — an emerging practice that is raising questions about its purpose.

The quasi-governmental Korea Student Aid Foundation extends student loans of up to 2 million won for living expenses each semester.

The loan is intended to cover essentials such as rent, food and transportation. Students can secure up to 2 million won per semester at an annual interest rate of just 1.7 percent. Increasingly, some students are channeling that money into financial markets.

This trend dates back to the early days of the COVID-19 pandemic, when the retail investing boom swept through young, first-time investors eager to capitalize on booming stock markets at the time.

What began as a fringe tactic has, for some, become more normalized.

“Even if it’s labeled as living expenses, the funds aren’t restricted in how they can be used, so why would investing them be illegal?” one user wrote on X, adding they had already maxed out their loans.

Several factors have fueled this shift, including ultra-low borrowing costs, long repayment periods and easier stock market access. Mobile trading apps and online brokerage account openings have lowered barriers to entry, making it possible to invest instantly.

According to the latest data from the Korea Student Aid Foundation, living expense loans alone rose from 545 billion won in 2021 to 850 billion won in 2025. Over the same period, overdue balances more than doubled, from 19.2 billion won to 38.7 billion won.

As markets rally despite the deepening Iran conflict, even those who had little prior interest in investing can feel left behind, said Choi Chul, a professor of consumer economics at Sookmyung Women’s University.

“When people hear others are making strong returns, it’s easy to be tempted. Young people, in particular, can be drawn into high-risk, high-return bets without fully appreciating the downside,” Choi said.

He noted a visible shift in debt distress among younger borrowers. “We’re definitely seeing a growing share of young people entering debt restructuring programs in recent years.”

Borrowing to invest, he added, is fundamentally misguided, regardless of how low the interest rate may be. “Investment should be made with surplus funds, not borrowed money. Taking on debt to chase risky returns is reckless and undesirable. And student loans are policy-driven programs intended to support education. Using them for investment runs counter to that purpose.”

The Korea Student Aid Foundation is aware of the issue and has introduced safeguards.

“We provide mandatory financial education when loans are issued, clearly informing borrowers of the risks and that funds are not intended for other uses,” a foundation official said. “We also notify parents and offer installment-based disbursement to reduce the temptation of receiving a lump sum.”

Starting from the second semester this year, it plans to introduce individual caps on living expense loans and will continue reviewing additional safeguards, the official added.