Loan your children the money to pay for college.
In this episode, I'm going to address the question, "How is the best way to save
and pay for my children's college?" My answer is not what you think. But if you stay with me,
you're going to see the power behind giving your children ownership in their own education and how
you can give them loans, grants, scholarships, matching funds. But you want them to take
ownership in their education and they will get better grades. They will take more responsibility
and accountability for their education rather than just shelling it out like, "Mom, dad,
you owe me my education." No. My parents didn't pay for mine. We have 6 children my wife and I.
We didn't pay for any of their college educations. You're going to see how we did it better instead.
My name is Doug Andrew and I've helped many, many families especially parents and grandparents
understand how to empower their children and grandchildren to take ownership in maybe their
college education rather than just shelling it out and paying for their kids at college. And when you
understand in this episode how to do this, you're going to see how this will help your children be
more responsible and accountable; have some skin in the game, and they come for a hand up but
never a hand-out. Now, I mentioned I grew up in a family of 6, my wife grew up in a family of 6.
Our parents couldn't afford to pay for our college education. No problem. Do you know that I
got several different scholarships as did my wife. I worked at Kentucky Fried Chicken in college 30
hours a week. I had better study habits than most of my friends whose parents were just shelling it
out. They were goofing off all the times. I had to budget my time to study. So, I contributed and my
parents might loan me a little bit but I paid the loan back. And I got my education, my wife got her
education. She worked at a bookstore 30 hours a week in college. So, when we got married, we
didn't want any of our six children ever to think we would just pay for their college education. And
we didn't. We gave them equal opportunities but not equal distribution. We would create systems
where we might match, where we might loan them money and they could pay it back with cash or with
performing labor or painting or shampooing carpets. You're going to see how we empowered
them. And they were all light years ahead of many of their friends with their college education
because they took ownership in their college education and they knew that that was precious
time and money that they were expending out of their own pocket directly or indirectly. So,
you can empower your children or grandchildren or even some of your employees. I've done this with
and some of my clients children by offering loans, scholarships, maybe matching funds or grants.
So, I'll give you a couple of examples here. And this is what we call a family bank that I'll talk
about here in just a few minutes. But when I loan money to my children for their education or even a
business venture, we actually sit down and draft an agreement. Sometimes they've been verbal but
we make it very, very clear. "This is a loan." And they must come to me with what is called a
solution formulator how they plan to pay back the loan and several contingencies. So, if I
loan them money, a lot of times I require they have to have skin in the game. And so, if they
are wanting to borrow 20,000 or 10,000 or 100,000; they have to come up with that much on their own.
If they wanted to buy a house and they needed 50,000 for a down payment, they have to come
up with 25,000 themselves. And then I might match it. But it can be a match or it can be a loan but
they have to have skin in the game. It's not just this handout. I want to give them a hand up not a
handout. And so, when you loan money, it's based upon them having skin in the game. You loan it to
them and then you have a period where they will begin to start paying you back either in cash.
And they have to be timely. Or you give them alternative ways to pay back the loan that I'm
going to talk about. Whether it's painting or shampooing carpets or mowing lawns or whatever.
So, when we're talking about paying for your kids college, you don't want to just
sit there and dish out the money. We loaned our children money when they needed it for
certain degrees. And I'm going to share with you a couple of stories that we did with my son and
our daughter of how we loan them money. Now, we can also give them scholarships that if they earn
let's say 10,000 in a scholarship, we might match the scholarship with 10,000 and that's
a scholarship gift based upon them getting good grades or whatever. If you give them a grant,
many times we motivate our children and grandchildren to be entrepreneurs. And to
come up with an idea. And they can borrow out of the family bank $200, $2,000, $20,000. But where
much is given much is required. They have to show how they're going to 10 times that in less than a
year and I usually require they give 100% of it away to their favorite charity. And then
we will start a business venture out of it. And we either own 20% of it or 50% of it. And they
can buy us out, they can pay us back. They pay off the loan. They can use the grant. We do it several
different ways. So, you can provide a grant to encourage your children to be able to use it for
pursuing education or even a business opportunity. The last is matching. Many times when our children
would save so much money towards college or a business endeavor, we would say, "Okay,
we'll match 50 cents on the dollar or dollar for dollar up to one PhD." I've had many clients
do that because they didn't want professional students in their family. So, we will match dollar
for dollar up to one PhD for your education. And if you get a scholarship or you save money,
we'll match dollar for dollar for doing that. But it's not just a handout from mom and dad or
grandma and grandpa. Is this making sense? Now, before I go into what I call the family bank,
I wanted to share with you my favorite repository. The best way that I save money for all kinds of
goals including money that I might earmark to loan my children or grandchildren for their college
funding or matching fund or scholarships in my family bank is what I call the Laser Fund. A laser
is an acronym that stands for liquid assets safely earning returns. It's the title of my most recent
300-page best-selling book. At the end of this episode, I'm going to give you a link where you
can claim your free copy of that 300-page book. Okay? Now, the key here is you want to provide
for those you care about such as helping them with a worthy goal, getting their education with equal
opportunity but not equal distribution. And there's a lot of thinking that goes
into this because so many people think that being fair means that you treat everybody the same. No.
Our creator doesn't do that. See, our creator does not give everybody equal health regardless of how
some of us choose to abuse our bodies, okay? Our creator gives us equal opportunities to be able to
have an abundant life and actually sometimes gives us challenges so that we can grow and overcome.
See, our creator gives us equal opportunities in life but not equal distribution that regardless of
what you choose to do or not to do. I'm going to give you the same health as these people over here
that have been abusing their bodies with habitual substances their entire life. No. It doesn't work
that way, okay? So, what you want to do is have a system that when your children, and grandchildren,
those you care about are dealing above the line is what I call being responsible and accountable
then they have equal opportunities. That everybody in the family if they save towards college
that you might match dollar for dollar if you can afford to do that up to one PhD let's say.
Or that if they save or get a scholarship you'll match it or you'll go 50 cents on
the dollar or you'll provide grants for starting a business. It's not just for education because
we believe in education more than school. Did you hear that? See what we did with our children is
we actually gave them a lot of opportunities to learn by actually becoming entrepreneurs when
they were just little. I sold first aid kits when I was just a little kid, 8 years old. I did all
kinds of things to learn how to provide value. And so, we believe in education more than just school
in the classroom. I'm talking about the classroom of life. So, we provide all kinds of incentives,
grants, scholarship loans to help our children gain an education which is not always at an
institution of higher learning. We actually give them even higher learning. That's why
my 2 sons and 4 daughters when their peers were actually graduating with degrees,
my sons had already looked at over 1,000 tax returns. Real tax returns. Not hypothetical
ones in a textbook. And so, when their friends graduated and became CPAs, my sons were doing
circles around them with helping people save unnecessary tax because they were
out in the real world. Now, the whole point is you want to provide these equal opportunities.
If you're going to have funds that's allocated toward helping your children get educated,
do it in a way where they have skin in the game and they have all the same opportunities
but they have to step up to the plate. So, I'm going to give you some examples of how we do
that and what we call our family bank. So, I mentioned when we have funds that we earmark
for our family bank where we teach our children that they have equal opportunities, there's no
such thing as equal distribution because there's nothing more unequal than the equal distribution
to unequals. And they understand what I'm talking about. They have to have skin of the
game. Be responsible and accountable. So, when we talk about our children's college education,
I usually have money accumulated in my favorite vehicle which I call the Laser Fund. And I have
several of them. My wife has several. And now, our children do. You can learn what the Laser Fund is
when you claim your free copy at the end of this video because I'll pay for the book and you just
contribute towards the shipping and handling. But you'll see that the Laser Fund allows us to have
money that is accumulating tax-free. I can access money anytime. It's extremely liquid totally
tax-free. When I ultimately pass away, it blossoms in value and transfers income tax-free. That
is provided under 3 sections of the internal revenue code that have been around for over a
century. It's a sacred cow. Now, we have the money in there so that if our children may need help,
if they get a scholarship and I've decided to match them dollar for dollar or they want
to borrow money or they save money, however the rules of governance are on our children's college
education... And again, we believe in education more than school. So, it's business ventures. It's
semesters abroad. All kinds of ways that they get their education. Many times we have taken
money out of the family bank. Now, they know that in the laser fund that I am earning average rates
of return of 6 to 10 percent tax-free. I don't expect them to pay that much interest unless they
really want to be responsible and accountable. But they know the general account portfolio rate is
usually at least around 4 to 5 percent. They know this because I access money out of the laser fund,
I am borrowing the money from the laser fund. Because my money can still be earning 6, 7, 8, 9,
10 percent while the insurance company is charging me 4 percent. Did you understand that? In other
words, why would I withdraw money and give it to my kids and miss out on earning 8 or 9
or 10 percent because the insurance company will continue to pay me 8 or 9 or 10 percent tax-free
because they have my money there is collateral. They'll keep paying me interest. They're loaning
me money with that as collateral and they'll loan me the money at 3 or 4 percent. How much more is
8% than the 4%? 100% more. So, they know that. And so, I tell my kids. By using the Laser Fund,
I'll borrow money. I'll keep earning 8. But I'm giving up 4 because the insurance companies charge
me 4. "I want you to pay me 4%." So, that's what I charge my children in the family bank, is whatever
the net cost of borrowing the money out of the laser fund. But I never withdraw
money out of my laser fund or else I'd have to charge my kids the 8 percent that I'm earning.
I keep earning 8. I borrow money from the insurance company using my money as collateral
earning 8. And they loan me money at 4 at half the rate that I'm earning. So, I'm making money even
on my money while I'm using it to help my children in a family bank environment. But this is the real
world and the kids know that this money is not free. I'm having to pay an interest rate and I
will pass that on and they will be responsible to pay that back in the family bank in an installment
basis. So, in this episode, I've been addressing the question, "How was the best way to save your
for your children's college education?" Well, I've told you that my parents never paid for my
college education. They couldn't. They couldn't afford that. Same with my wife. We didn't pay
for our children's college education. We gave them equal opportunities. And so, we did that by
providing incentives that if they got a good grades, if they got an academic scholarship,
for every $1,000 they got in a scholarship, we might match $1,000. If they wanted to
borrow money from the family bank, I've told you that we take it out of our laser fund
because they know I'm borrowing money at let's say 4%. And they're going to pay that 4%.
But I give them the ability to do that with money once they graduate from college. And they get
a job. They now start paying back the money just like they would any student loan. But they're able
to do that in the family bank. But if they can't pay cash, they can work it off. They can help with
any of the properties we own or by mowing lawns or by detailing cars. There's been all kinds of ways
that they have taken ownership to pay back and pay for their education directly or indirectly.
What you want to do is empower your children. So, that they're never coming with their hand out,
"Will you pay for? Can I have?" Our daughter Mindy, they had a 3-month period before her and
her husband moved back to Iowa where he went to dental school. She wanted to work at a spa
where she could earn $4,000 a month to help him to not have to incur a whole bunch of student loans
when he was in dental school. She needed to get a certain degree at an esthetician school at a
skincare school to become a certified esthetician. She came to us and she didn't say, "Mom, Dad, will
you pay for? Can I have?" She said, "Can I borrow a few thousand dollars out of the family bank. And
when I get to Iowa and I get hired in this spa, this is how I will pay you back." And she did.
She was being responsible and accountable because of the way we set it up. They have never come and
said, "Will you pay for? Can I have?" It's always "Can I borrow?" And "Here's the way I
will pay you back" and "Here's a backup plan in case I cannot make monthly payments at the time
I told you I wanted to do that." This is a way so your children have some integrity. They have some
ownership in their college education. And so, this is far better than a 529 plan. And when I say far
better, I was talking about my favorite vehicle the laser fund. Having money accumulate tax free
in our family bank for college funding under this whole concept of loaning them money or providing
matching funds or scholarships, this is totally tax-free. But I don't have to use it for college.
529 plans accumulate your money tax-free. But you have to use it for college.
Sometimes our children did like I did. They worked their way through college. And so, they didn't
need to use those funds. And so, they can still take the money out tax-free that I had earmarked
for their first business venture. Why would I ever want to use a 529 plan with all of those
restrictions when I have the benefits of a 529 plan and a whole lot more without all the strings
attached using a Laser Fund. You'll understand why if you claim your free copy of this book.
I'll show you how here. But you want to make sure that your children explore options for
scholarships and stipends and so forth. I was able to get a lot of scholarships, academic, character,
leadership. I got a gerontology scholarship because of the economics of aging. A lot of
kids that go to school, they don't even check out the stipends that they can get. The scholarships
and the grants, the loans that they can qualify for. Those are the first areas you go. And then
they can come to the family bank for a student loan the way that I've explained in this
video. So, if you want to learn more, there's 2 books that I would recommend. Entitlement
Abolition and also The Laser Fund which is where we accumulate our money to be able to use in
our family bank. If you would like a free copy of this, you can go to entitlementabolitionbook.com.
If you want a free copy of this one, go to laserfund.com. You contribute a nominal amount
towards the shipping. And handling in each of those sites, if you want to get both books plus
audio versions, you can do that. But if you can't tell, I'm very passionate about empowering you,
by educating you. You can read and learn, you can listen and learn, you can watch and learn on
this YouTube channel. So, subscribe now. I post an in-depth answer to a question like this one
at least 5 days every single week. And I want to see you in future episodes.