How to Save for Your Child’s University and Avoid DebtAug 01, 2018
Does it seem like the cost of post secondary education keeps creeping up? If it feels that way to you, you might not be wrong.
According to a Maclean’s survey, students who live at home during their university career spend on average $9,300 a year, and those who move away to study spend closer to $20,000/year. Multiply those figures by four years and it’s not surprising that post-secondary costs can result in heavy debt for students or parents.
If you want to put savings aside to help your kids with school tuition and expenses when they’re older, those numbers can be really daunting. But you can meet your savings goals if you put a strong financial plan in place.
There’s more than one way to help your kids through their post-secondary
While paying for tuition is often the default goal, there are a lot of ways to contribute. Your family’s unique financial situation and your values determine what you can contribute, and how. Sometimes, the logistics of going to school are trickier than the tuition itself.
For some parents, ensuring their child has somewhere safe and affordable to live is key. How might that translate into financial help? It could mean paying rent, buying an investment property that could later be sold or rented, or helping your child research the best living accommodations and co-signing a rental agreement.
You may wish to help with textbooks, supplies or transportation costs like buying and maintaining a vehicle or covering a train or bus pass.
Teaching your children how to manage their money and budget is also critical, so that they can avoid consumer debt when they finally do attend university or college.
Find a college budget template and mobile budget tools here, from Mint.
Depending on your personal budget, your own debt load, and personal preferences, how much you save (and when) could look very different than another family’s plan. Don’t get caught up in what you think is expected.
One way to brainstorm potential future costs and decide where you can help is by checking out My Money Coach’s semester by semester budget planner. There may be costs you’re overlooking, or costs that aren’t applicable to your child’s situation.
Open an RESP or a TFSA
It can be difficult to fit post-secondary savings into your regular monthly budget. Once the costs of child care, everyday expenses and debt payments are covered, many families have very little wiggle room left in their budget.
But, even if you’re feeling financially pinched, a Registered Education Savings Plan (RESP) or a Tax Free Savings Account (TFSA) is an effective and easy first step. Every little bit helps, so think outside of your budget.
Consider asking grandparents, aunts and uncles or family friends to contribute to your child’s university fund in lieu of a birthday or Christmas gift. “Found money” like rebates or tax refunds can also go directly into an RESP or TFSA.
By making direct, large or small contributions as they become available, parents can achieve the same savings goals — especially if they start saving when kids are young.
Even if you can’t contribute much to your child’s RESP, just setting it up helps. Doing so can make your child eligible for the Canada Learning Bond, which could provide hundreds or thousands in grants for your child in the future.
Bursaries, grants, awards, and scholarships
Too often, parents and students forget to look for grants that might be available to them. The government of Canada offers some resources for specific types of grants, and the types of scholarships could be especially helpful for students in specialty programs or fellowships that are expensive. If your child decides to stay in Ontario, there are some province specific ones available, too.
Small awards, grants, or scholarships can go a long way, and there’s often no limit on how many your child receives. Start searching now for community organizations in your area that offer awards that your child can become involved with.
Social, cultural, religious, and academic-based awards are plenty. Check out some of the sites and databases to see if any apply to your child.
There are ways to budget and save money for your child’s future education. Find the right way to contribute to their future without putting yourself in debt.