Beth and Ruth are two first-time grandmas.
Both are so excited about their very first grandbabies.
They were both so excited that they wanted to do something special to help give their grandchildren the best chance in life, so they decided to help save for college to reduce or eliminate the need for student loans. Their reasoning for doing this is that it would allow a young person the freedom to enter the world of adulthood in an unencumbered financial state. Preventing the added burden of compounding debt makes saving for college one of the most important financial decisions a family can make. It helps give students access to higher education and reduces the student loan debt they would otherwise have to take on and bear as adults. College savings funds are a great way to start setting aside the cost of college without putting too much strain on the family.
The Financial Burden of Student Loans
Student loan burdens are a significant source of financial stress for many college graduates and their families. Not only do they have to make monthly payments that can sometimes be pretty considerable, but the burden of these student loans can threaten their ability to save, invest and build wealth in the long term. In 2019 it was estimated that student loan debt had surpassed $1.5 trillion, according to a report published by the Federal Reserve Bank of New York. This amount has grown since then.
According to an article on NerdWallet.com, as of 2022, Americans owe approximately $1.76 trillion in student loan debt. This figure represents a significant increase from previous years and has made student loan debt one of the most burdensome forms of consumer debt in the United States.
It is worth noting that student loan debt is uneven across all borrowers. In 2021, roughly 45 million Americans had student loan debt, but a small number of borrowers owed a significant share of the total debt. For example, approximately 25% of borrowers owed more than $50,000, while about 10% owed more than $100,000, and the balance grows as interest compounds over time.
So, what did our two grandmas do?
Both grandmas had $50k to seed a college fund, but grandma Beth put her $50k gift in a savings vehicle that would earn 4.75% annually. At the same time, grandma Ruth was knowledgeable about commercial real estate syndications. She invested her $50k with friends who are A-Player syndicators she knew and trusted, which is how she learned about opportunities. After consulting with her financial and legal team about the specifics of her situation, she waited for the right opportunities that satisfied her goals and invested her $50k into her first syndication which operated successfully for five years. On average, each subsequent syndication that grandma Ruth invested in went "full cycle" every five years so she rolled her original $50k plus new capital growth into another syndication and continued this strategy for a total of 4 syndications over 20 years to maximize the growth of her grandchild's college fund.
The Results in Summary
Grandma Beth's 20-year result: $126,488.00
Grandma Ruth's 20-year result: $420,000.00
Want to see detailed results? Download the full story!
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