Parents Surprised by the Projected Costs of Education
It’s Education Savings Week in Canada and many Canadian parents are thinking about the challenges of saving for their children’s post-secondary education. A good first step for many parents is opening an RESP (Registered Education Savings Plan) for their child or children, but do they have an actual plan that details how much they need to save and how they’re going to accomplish this? And have they accounted for both the ever-rising costs of post-secondary education and all of the ancillary costs, such as living expenses, visits home or transportation?
Educating and encouraging parents to plan well for the future is at the heart of what we do at Knowledge First Financial, and with these questions in mind, we commissioned a consumer survey with Ipsos to see how Canadian parents are managing their savings goals, and if they are confident in their plans. We found that parents are planning for the future, but that they might need to take a look at the entire cost of post-secondary education, rather than just tuition and books.
- Many parents have started saving for their child’s education, but 55% of parents don’t have a written plan on how to reach their savings goals.
- Two thirds of parents within children under the age of twelve think they know the cost of post-secondary education, yet when presented with the actual projected costs, are surprised as to the potential costs.
- Only 37% accounted for residence or accommodation in their planning and only 16% of parents accounted for visits home. These can be significant costs, especially if your student chooses an institution out of province.
- Less than half (42%) accounted for transportation, which can add up if a student lives at home but needs to commute a long distance to school each day.
Once parents are informed of the projected costs of education, 75% say they want to increase their education savings goal – and this is where we can help. Careful preparation and creating a written plan are key steps in ensuring that you’ll be able to reach that goal. Accessing programs like the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB) is also critical to maximizing your savings in an RESP. The CESG will match 20-40% of parents’ contributions (up to $7200), and CLB adds an additional grant of up to $2000 for low-income families. As these funds are invested along with your own contributions, your plan will continue to grow.
At first glance, the process of opening an RESP, developing an educational savings plan, understanding the potential costs, and accessing the CESG and CLB grant programs may seem daunting, but working with the right partner can make the process easy and seamless. At Knowledge First Financial, we’ve been helping Canadian families maximize their education savings for over 50 years, and we have over 1,400 RESP specialists across Canada – each of whom can advise on the future costs of education and provide advice and a written plan that is unique to each family’s situation.
Reach out to us – we have an RESP specialist in your area who can help you reach your education savings goals.