Nelson Nash’s Becoming Your Own Banker: Part V, Lesson 7, A Different Look at The Monetary Value of A College Degree


Content: Page 75-81, BECOMING YOUR OWN BANKER – The Infinite Banking Concept.

To compare the results of putting money into a college degree with teaching the student the value of “banking” using dividend-paying whole life insurance, there are two examples in the book.  Since the one involving medical school is the ultimate one, I’m going to go directly to it.  Please study the other on your own.

I’m not going to put a monetary value on the degree as was done in our presentations some 30 plus years ago.  I am going to let you decide for yourself what a reasonable figure might be.

To set the stage, there are twin young ladies:  One is going to a major, big-named university in the Southern United States where I know it costs $35,000 per year to do so.  And then, she is going to medical school at the same institution at the same cost per year.  We will assume that the cost is borne by her parents and grandparents.

Her twin, Susie, is not going to college or to medical school.  Her parents and grand-parents put the same money into “high premium whole life insurance” with a major mutual life insurance company — and got her a job as receptionist at the same medical school.  Additionally, they made sure that she attended the Infinite Banking Concept seminar every six months for eight years so that she fully understood the process.

On page 80 you will see the design of the policy — $11,375 is the premium on a Life Paid-Up at 65 and $23,625 is the premium for a Paid-UP Additions Rider, the total of which is $35,000 – the same as the cost of the undergraduate and medical degree for her sister.  Refresh your memory of where this policy design fits on the scale on page 38 of my book.

After eight years you note that the cash value is $339,713.  On the first day of the next year Susie withdraws dividend credits in the amount of $37,500 and finances a luxury car for someone (it could even be her own).  The typical monthly payment on such a car is $11,375 per year so she pays this in lieu of car payments to a finance company.  This shows up in the Net Premium column, line 9, as (-$26,125).   We covered this procedure in the Equipment Financing sessions in Part 4 of this course so it should not be hard to follow.  There are no policy loans in this example – the purchases are made with dividend withdrawals.

She repeats the process every four years and, going to line 45, you will note that she cannot pay but 3 years on this car – the policy won’t hold it – it is paid-up at age 65.  Also, notice that the next car (line 49) is “free” for the same reason.  At age 70 she has, $10,282,267 in cash value and she can begin “passive income” at that point of $550,000 per year for the rest of her life from dividends, alone.  On page 81 let’s assume death at age 85.  She has recovered all the money that was paid into the policy plus $8,488,875 in income – and she still delivered $18,168,676 in death benefit to the next generation.  I know a lot of doctors and not even one that has even come close to this result, financially.

At the end of the first eight years, her sister must go through Internship and Residency for another four years and has not earned much during this time.   Then she begins her practice of medicine and must buy malpractice insurance immediately.   The costs can range from $25,000 per year to as much as $200,000, depending on her specialty.  The doctor must begin a retirement plan of some kind, too.

Susie doesn’t have to concern herself with any of these things.  What’s more, if Susie really wants to make some money, she can go to the insurance company at the end of the first eight years and say to them, “Lend me enough money out of my policy to buy eight of those luxury cars.  I’m going to take them down to that medical school and lease them to some of those doctors that I have met there.  Most all of them drive cars in that price range and I have found out that most of them are leased.  I’m going to give them a little better deal than they can get elsewhere.”  Out of the income from those lease payments Susie can add a ninth car to her fleet in about a year.  Eleven months later she can add a tenth car — ten months later she can add an eleventh car, etc.

Hopefully, you get the picture.  After about three years of building her fleet of cars, she can quit her job as receptionist at the medical school and just lease cars to doctors that work within a half-mile radius of the school.  She can make a handsome living out of this business — in addition to the figures you see in the illustration!

In summary, I don’t think that the monetary value of a college degree is quite the advantage that we were taught some 38 years ago.   Yes, society does need doctors – but one shouldn’t get into the profession for monetary reasons.