Are you saving for your child's education?
If you are and feel overwhelmed, you're not alone. Post-secondary was expensive when you were younger, so what your kids are likely to pay might feel equivalent to the cost of a Porsche.
According to Statistics Canada, tuition prices averaged $6,693 for the 2021/2022 academic year with $1,002 in additional required fees. If that amount increases by just 2% annually, in 18 years, it will cost $10,990.35 a year just for the price of admission. And that doesn't include residence or living costs, which are currently well over $10,000 a year.
So how are parents planning on helping their kids attend post-secondary education?
We found with the 2022 Scotiabank Student Banking Poll that while parents (like you) are concerned and overwhelmed by the process, many have plans in place and are on their way to meeting their goals of helping their kids make their dreams of being a veterinarian, or an astronaut, or a video game designer come true.
That's good news for future students. With the average student debtor for students earning master and bachelor degrees being around $28,000, that's only expected to increase in the future.* Any money that parents or families can put aside to help out can go a long way to reducing the debt students start their lives with. It can also make some of their educational goals possible – like going to graduate school.
Parents are feeling the pressure
Saving for post-secondary is no easy task. Our study found that:
- Six in ten parents (63%) were concerned about finding the money to pay for their children's schooling
- 61% find the process of financially preparing for their children's schooling overwhelming
- Parents with household incomes of less than $50,000 (77%) were more likely to be concerned about finding the funds than parents with household incomes of $50,000 to $90,000 (63%) and $100,000 (52%)
We also found that parents in Quebec (42%) were less concerned about post-secondary education, while parents in BC (47%) were significantly more likely to strongly agree that they were concerned about finding the money.
Concern broke down based on how old their children were. Parents of kids under 13 (68%) were more likely to be worried than parents of kids between 18 and 24 (57%).
Parents in BC (74%), Manitoba/Saskatchewan (69%), Ontario (65%) and the Atlantic provinces (68%) were also more likely to say saving for schooling was causing them concern than parents in Quebec (44%).
So, how are they planning?
Curious about how your fellow parents are saving? Turns out, not all of them are. We found that 13% of parents don't plan to fund any part of their children's education. Those that are hoping to help are using a number of different strategies, including:
- RESP (Registered Education Savings Plan) (59%)
- Personal savings (48%)
- Scholarships (30%)
- Government loans (22%)
- Grants (18%)
- Bank loans (13%)
- Borrowing money from family members/friends (6%)
- Other (4%)
Parents were more likely to be using a RESP to pay for their kid’s education if they lived in BC (62%), Alberta (62%), Manitoba/Saskatchewan (64%) and Ontario (60%) than parents in the Atlantic provinces (41%).
Parents in Quebec (60%) were the most likely to say they would use their personal savings than parents in Manitoba or Saskatchewan (30%).
Many parents are hoping their children will earn scholarships, with parents more likely to believe this will be how their children will finance their education if they're from BC (43%), Manitoba/Saskatchewan (37%), and Ontario (32%).
Government and bank loans round out the list of top funding options with parents in BC (20%), Alberta (25%), and Ontario (30%) more likely to say they plan on using government loans. Meanwhile, banks loans were more likely to be the choice of parents in Ontario (16%).
They'll work hard for their money
Many kids will be using their own elbow grease or ingenuity to buy their textbooks. About half of all parents expect their kids to pay all or some of their educational expenses. In contrast, 19% don't expect it at all and 31% aren't sure.
Parents in Alberta (57%) and Ontario (54%) were more likely to say they expect their children to work to pay for some or all their post-secondary tuition costs.
Families with higher incomes of $50K-$99K (54%) and over $100,000 (61%) were more likely to say they expect their children to work to pay for some or all their post-secondary tuition costs compared to parents with household income of less than $50K (39%).
There you have it!
As you can see from our study, there's no one way to save for post-secondary. Parents across Canada are doing it differently, with some parents expecting their kids to pay for some of all of their tuition.
Remember you aren’t alone is you feel overwhelmed by the process. It's hard to put money aside when you also need to pay for soccer fees, hockey equipment, dance lessons, and family vacations to create memories you'll always have to look back on.
Come in to talk to a Scotia advisor about how you can start saving towards your kid’s education. We'll help you come up with a plan that works for you and your family.