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The School of Their Dreams

Would you like your child to be able to afford to go to the school of their dreams without having to pinch pennies for 20 or so years? 

  •  A student needs $25,000 per year for college/university
  • There are 18 years to save 
  • $300 per month target savings 

Infinite Banking is a concept created by Nelson Nash in his book “Becoming Your Own Banker”. It uses specifically structured whole-life insurance policies that distribute dividends and accumulate cash value. This allows you to create a “family bank” that you can use to build an emergency fund, plan for retirement, optimize investments, or in this case pay for college. Historically these policies have growth at ~5%+ annually and have guaranteed cash values. Let’s look at how this would look for a 35 year old male with an assumed rate of 4.5%, a contribution of $300 per month and cost of $25,000 per year: 

You will be in an accumulation phase for the first 18 years as you accumulate more than $90,000 in cash value. At that point you will begin to withdraw expenses for tuition, etc. These are taken out as loans against the policy. So after four years of university, the loan balance is $113,000, and the dividends and cash value continue to grow! Our plan is to encourage our children to pay this back over time so that they have access to the funds later in life for a house, funding a business, paying for a wedding, etc. “But I don’t want my child to have any debt after college!”, you say. This is not a debt to a loan originator. This is a debt that you pay back to yourself. We feel that sharing the ability to pay for university is highly beneficial and provides the following opportunities:

  1. Understanding that there is an opportunity cost to going to college. I want my children to know that there is a monetary cost and a time cost. 
  2. Financial acumen and discipline: After they understand the opportunity cost and ROI (Return on Investment), they will have the discipline to pay this money back. When they start making loan payments their loan balance will decrease, cash value will increase, as will the death benefit.
  3. Future: Once the loan is paid back, my children will have the ability to access this cash throughout their lives. How different life could be if our students had access to these funds after university and not just up to university? 

Cole Snell, Wealth Architect, Ascendant Financial


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