You may be wondering what your child’s post-secondary school years will look like. What will tuition and student residency cost? And most importantly, who will pay for it all?
Education and living costs
Let’s talk tuition first. Today’s college students can expect to pay an average of $6,000 for a two-year program. It’s safe to say that a university student faces roughly twice the cost. While tuition fees provide a desk in the classroom, they don’t cover the costs of residency, parking, food, clothing, etc.
Bear in mind that if you’re raising a preschooler now, a $6,000 college tuition fee becomes $10,806 in 15 years based on my calculation and factoring in current inflation. Depending on their program, university may reach $20,979 for only one year of enrolment –according to www.getsmarteraboutmoney.ca.
In addition to tuition fees, think about the costs of living while your child attends a post secondary institution. Student residency can range from $4,000-$6,000 per academic year. On top of this, consider an additional $5,000 for meals, clothing, transportation, household items, etc. Not to mention another $500-$2,000 for program textbooks and supplies not included in tuition fees.
After understanding the full view of post-secondary education prices, next to determine is who will pay for it. Loans such as the Ontario Student Assistance Program (OSAP) are available to families that meet the household financial criteria.
OSAP must be paid back upon graduation; however zer-per-cent interest periods are available if the student qualifies. Government and school grants are also worth applying for. Grants are free money applied to eligible student loans or tuition fees and are not required to be paid back.
Some students work part-time while studying and full-time during the summer. If this is a possibility with your child, I definitely recommend it as it teaches hard work, dedication and financial responsibility.
If your child has a while to go before post-secondary school, I suggest taking advantage of a Registered Education Savings Plan (RESP). An RESP is a tax sheltered investment vehicle. This means no tax applies until a withdrawal is made.
Furthermore, payments made to the beneficiary are taxed in the hands of the student, not the plan holder. Multiple children can be named as beneficiaries within the RESP to receive future withdrawals.
As an added bonus, the government has a grant incentive to the RESP: the Canada Education Savings Grant (CESG). For this program, the government will provide an extra $0.20 for every dollar contributed in respect of each qualifying beneficiary, up to a maximum of $500 annually (up to a lifetime maximum of $7,200).
In addition to the CESG, there are other grants available for the RESP, such as the Canada Learning Bond.
Speak with a trusted financial adviser about the RESP as an education savings option for your future scholar.
Heather Tarnopolsky is a Sun Life Financial adviser in Greater Sudbury.