Bitcoin to Get Rid of Student Debt?

By Patrick Gruhn

The strategy behind a “strategic reserve” is rather simple: a government stockpiles a critical resource like oil or gold to have available in the event of a supply disruption. It is essentially a step to strengthen national security by protecting against price volatility.

That being the case, the recent announcement by US President Donald Trump that his administration was establishing a “Strategic Bitcoin Reserve” prompted some pushback. An article that appeared in Barron's on March 19 stated the move was “neither strategic nor a reserve,” while an op-ed in Coindesk on March 4 provided eight reasons why the reserve was a bad idea.

To be fair, the order didn’t provide many details on how the reserve would be utilized. It simply laid out the plan to create a collection of custodial accounts called the “Strategic Bitcoin Reserve” and use them to amass a “United States Digital Asset Stockpile.”

The order designated the Secretary of the Treasury as the authority responsible for determining “strategies for responsible stewardship of the United States Digital Asset Stockpile in accordance with applicable law.” And while the order gave 30 days for US agencies to provide a “full accounting of all Government Digital Assets in such agency’s possession,” it didn’t give the Treasury a deadline for delivering a strategy.

As experts await the next chapter in the Bitcoin reserve story, some have suggested that gains experienced by the stockpile could be used to offset US national debt and improve investor confidence — a plan the president himself floated while campaigning in 2024. The BITCOIN Act of 2025, which was introduced in the US Senate less than a week after the White House announcement, calls for the creation of a similar reserve and includes provisions that would allow the reserve’s holdings to be released “for the sole purpose of reducing the national debt.”

Critics of the plan to use US Bitcoin earnings for debt reduction cite differences in scale as a key sticking point. Even if the US were to purchase 1 million Bitcoins — the number suggested by the BITCOIN Act — it would still need to witness a 20,000+ percent increase to provide the necessary funds to address its $36 trillion national debt.

I suggest that earnings in the eventual Bitcoin reserve be used to address a more reasonable target: US student loan debt.

Recent statistics set outstanding federal student loan debt at $1.64 trillion, a total which some say amounts to a crisis. The Biden Administration sought to address the debt through loan forgiveness, with further statistics released in late 2024 showing that nearly $190 billion in student debt was cancelled during Biden’s presidency.

President Trump has not been a fan of debt forgiveness. In fact, he has enacted several initiatives since taking office that limit who is eligible for existing programs and the amount of assistance they can receive.

However, doing nothing to address outstanding debt could cause widespread problems. For example, high debt levels reduce consumer spending. Currently, the average debt balance is more than $38,000, with average monthly payments standing at $536. With the average borrower taking more than 20 years to pay off student loans, the economic impact of reduced spending caused by the debt could be lengthy.

Student debt also has the potential to impact the US housing market. The debt not only discourages borrowers from taking on a mortgage but also makes it more challenging for those who are ready to become homeowners to secure a mortgage.

The risk of losses due to default is another issue stemming from the high amount of student debt held by the government. Recent statistics show that approximately 5.6 million students are currently in default on their loans, which includes only those who are at least 270 days behind on payments.

The Strategic Bitcoin Reserve doesn’t provide the perfect solution for student loan debt. Bitcoin’s volatility, a characteristic no one expects to change even if the reserve becomes a reality, makes it a risky choice for any financial strategy. It also brings into the equation a regulatory environment that is still evolving.

Still, if those charged with managing the reserve are looking for ways to use it constructively, leveraging earnings to address student debt is a possibility that should be explored. If such an initiative were to succeed, it would improve the overall economy and give millions more Americans a reason to believe in the power of Bitcoin.

Author Bio

– Patrick Gruhn founded his first IT Startup at the age of 18 (and his company was more than 20 times rated best in German IT magazines) that operated its own data center in Germany and is also a co-founder of a power supply company with more than 150,000 customers in addition to being the CEO and owner of the catholic TV network K-TV. Mr. Gruhn was a Partner of K&G Lawyers, later renamed to Crypto Lawyers, a Swiss firm specializing in digital assets. He was also a Co-Founder of DigitalAssets.AG, the company that made tokenized stocks available with an approved Security Prospectus, was sold to FTX in 2021. Now, he is a founder of Perpetuals.com*, a MIFID II Market Infrastructure startup for Crypto Derivatives Trading.*