It’s no secret that the cost of sending your kids to college or university is rising – and has been for quite some time. So let me ask you a question, are you saving for your kids’ education and do you know how much it truly costs to send your children to college or university?
The cost of university tuition in Canada
During the 2015/16 school year, undergraduate students in Canada paid an average of $6,000 in tuition alone says Top Universities https://www.topuniversities.com/student-info/student-finance/how-much-does-it-cost-study-canada . That was up more than 3% from the same figure in the previous year, which in turn was 3% higher than the year before it.
The shocking fact is that this statistic only representations the cost of tuition. It doesn’t include the cost of resource materials, books, living costs and personal supplies. According to The University of Alberta http://www.ualberta.ca/graduate-studies/prospective-students/tuition-and-cost-of-living-estimate students (and their parents) can expect annual living costs for the school year to be around $16,800. That adds up to a total yearly post-secondary school cost of over $22,000.
Ways to save for your kids’ education
With current forecasts predicting that the trend of rising tuition costs in Canada will continue, it’s important for everybody with school-aged children to put saving for your kids’ education at the top of your financial goals priority list.
The best way to start saving is to talk to a financial advisor and set up a Registered Education Savings Plan (RESP). On top of a number of tax-sheltering advantages an RESP offers, there’s the instant benefit of collecting the Canada Education Savings Grant (CESG) http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/resp-reee/menu-eng.html from the federal government. In most cases, this grant equals 20% of the amount you contribute into the RESP - and can sometimes be even more. If you make your maximum contribution to the plan, you can eventually end up with $7,200 in grant contributions from the government.
There’s lots more to know about RESPs and how they can help save for your kids’ education. If you’d like to have a discussion about this plan and how education savings can fit into your overall financial goals, please get in touch with me anytime.