How the Student Loan Impact Fund Works
The Student Loan Impact Fund is a 7-year impact investment that uses a novel strategy of private student loans and dividend stocks. During the Fund's initial years, a majority of capital is invested in high quality 5-7 year amortizing education loans. A smaller allocation is invested in a managed equity income strategy built with 20-25 dividend stocks hedged with covered call options. The fund's minimum target yield is 3% - 4% annually, after fees. However, there is capital appreciation potential each year from the managed stock portfolio.
Student Loans in the Fund
To address the burden of high cost student loans, 75% of investors' capital is used to refinance education debt of creditworthy graduates. Borrowers with qualifying credit may refinance at interest rates ranging from 4.10% APR to mid 6%'s APR. For some, a private education loan from Student Loan Impact Fund may save 10-50% during the life of their loan.
A Fund Strategy for Scholarship Impact
To enhance the yield from the Fund’s loans, the manager allocates to Capital Wealth Planning's proprietary strategy, the Enhanced Dividend and Income Portfolio. Since 2013, EDIP has generated 4% -7% per year from dividend and option income. When combined with stock appreciation, EDIP has produced over 14% annualized returns from 2013 - 2021. When the Fund's overall returns exceed its 3%-4% annual distribution, 50% of the excess return is donated intentionally by investors to designated scholarship programs for low-income, first generation, and under-represented college students.
How We Share Collected Information
The Student Loan Impact Fund is the first investor fund to provide competitive investor returns and a social impact from loan refinancing and scholarships.