How much should you contribute to your child’s education?
October 12, 2017
According to a May 2017 Globe and Mail Report average university/college tuition in Saskatchewan is over $7,000/year but you need to also factor in living expenses, books etc. And if your child is just starting kindergarten, it is not easy to predict how costs will escalate over the next decade or more.
Many parents wisely take advantage of the tax breaks and grants available by saving in Registered Educational Savings Plans. But they also expect their kids to contribute to the cost of their post-secondary education by applying for scholarships, working part-time and taking out student loans.
Therefore it is interesting to note the results of a recent poll conducted on behalf of RBC® that found students who receive less than one-quarter of their funding from parents feel more confident in their financial decision-making and are more likely to make and stick to a budget compared to their peers who receive more family financial support .
|Students whose parents contribute less than 25%
|Students whose parents contribute 25% or more
|I feel confident in my financial decision making
|I make a budget and stick to it
Expectations after school
Students receiving more financial support not only have more expectations of parental assistance during school but are twice as likely to expect some help from their parents post-graduation (21% compared to 11%).
“While contributing financially to your child’s education is a wonderful gift, being clear on expectations from both parties is really important. Make sure you discuss the ‘terms’ including when financial support will end,” says Laura Plant, RBC Director, Student Banking
Tips for Parents
- Have “the talk”: Start talking about budgeting and money management with your child early on. The earlier you get the conversation started, the more prepared everyone will feel when it comes time to start paying for tuition and other expenses. The transition to post-secondary education is significant – reducing money stresses is one way of easing the change.
- Start saving early: If you plan on contributing to your child’s education, save early and save often. One way of getting started is by opening up a Registered Education Savings Plan.
- Set the expectations: If you plan on contributing to your children’s post-secondary education, set the expectations on what you will contribute and what you expect them to contribute. Getting everyone on the same page is an important first step.
Tips for Students
- Don’t leave free money on the table: No matter how you are funding your education, there are lots of resources out there to help you access free money, including scholarships. Resources such as ScholarshipsCanada.com and StudentAwards.com will help you on your journey to free money.
- Save, Save, Save: Develop a habit to save on a regular basis. No matter how small the amount, saving can help you achieve your short and long term financial goals – whether it’s paying for tuition, rent or saving up for a reading week vacation. Let your money work harder for you by setting up automatic transfers from your daily chequing account into a separate high-interest savings account or guaranteed investment certificate to be used towards your goals.
- Talk to an expert: Let’s face it, as a post-secondary student (or soon to be student), you have a lot on your plate. Speak with a financial advisor on how to start saving and what options make the most sense for you and your family. This will help set you up for success.
We contributed to our childrens’ university education using RESP savings and current earnings. While I didn’t keep track of how much we gave them or what percent of their educational expenses we covered, they were able to graduate from their first degrees debt free.
Both kids also have Masters degrees and took post-graduate professional college programs which they self-financed. My son had scholarship money and my daughter worked for a major public sector union that paid for her tuition as she successfully passed each course.
I am quite confident that the financial lessons they learned living on a student budget and helping to support themselves were just as important to their future success as the programs they formally studied at university.
|Written by Sheryl Smolkin
|Sheryl Smolkin LLB., LLM is a retired pension lawyer and President of Sheryl Smolkin & Associates Ltd. For over a decade, she has enjoyed a successful encore career as a freelance writer specializing in retirement, employee benefits and workplace issues. Sheryl and her husband Joel are empty-nesters, residing in Toronto with their cockapoo Rufus.