A recent survey conducted by Clasp revealed that approximately two-thirds of healthcare students are actively placing bets on prediction market platforms such as Kalshi, DraftKings (DKNG), and FanDuel, with the explicit goal of using their winnings to cover tuition costs. This striking statistic underscores the financial desperation facing students pursuing healthcare degrees, where the cost of attendance has reached extraordinary levels.
The Association of American Medical Colleges reports that the median four-year cost of attendance for the class of 2026 stands at $297,745 at public medical schools and climbs to $408,150 at private institutions. The magnitude of this tuition cost creates a staggering financial burden for many students.
“These students aren’t betting for fun,” Tess Michaels, CEO of Clasp, told CNBC recently. “They’re budgeting winnings into their tuition plans, and most of them are barely breaking even.”
Med Students Don’t Have Time to Drive for Uber
Additionally, with time at a premium for healthcare students, the sheer magnitude of these tuition bills appears to be driving students toward high-risk financial behavior that would typically be considered imprudent.
Prediction markets like Kalshi allow participants to buy and sell contracts tied to specific outcomes, with prices fluctuating between zero and one dollar based on perceived probabilities.
For those in search of a “quick fix,” the appeal is clear: a successful trade could generate meaningful returns quickly, potentially covering a semester's worth of expenses in a single well-placed position.
That contrasts starkly with the realities of a traditional second job or side hustle, which can add significant demands to the time, energy, and resources of a strapped healthcare student.
Why Prediction Markets Are Too Risky to Fund an Education
However, financial analysts and educators have raised serious concerns about this trend, noting that prediction markets are inherently speculative instruments not designed to serve as college funding strategies.
The risk of total loss on any individual contract means students could find themselves worse off than before, potentially losing money they desperately need for tuition, housing, or living expenses. The psychological allure of a potential windfall appears to be overriding rational financial planning among a population already under extreme stress.
The tax treatment of prediction market winnings adds another layer of complexity that many students likely have not considered. The IRS has yet to issue clear guidance on how such income should be classified, with possibilities ranging from gambling income to capital gains to Section 1256 futures treatment, each carrying dramatically different tax implications.
As a result, students who do win big to start chipping away at their tuition may face unexpected tax bills that erode their gains significantly.
What’s the Root of the Issue?
The underlying driver of this phenomenon is the structural inadequacy of traditional funding mechanisms relative to healthcare education costs.
Federal student loans, while offering important borrower protections, cap direct unsubsidized borrowing for graduate students at a dollar amount that falls far short of what medical school actually costs. This gap between available aid and total cost of attendance creates the financial pressure that pushes students toward unconventional and risky alternatives.
The Clasp survey findings should serve as a warning signal to policymakers, educational institutions, and financial regulators that healthcare education financing has reached a breaking point, with students willing to gamble their limited resources because the conventional pathways feel equally untenable.
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