Statistics Canada reported that the average undergraduate tuition and service fees bill in Canada last year was over $6000. Add in the price of accommodation, meals, books and other living expenses and the total annual cost for today’s student runs between $16,000 and $20,000 a year, estimates David Trahair, a financial author and CPA who runs his own financial analysis firm in Toronto.
Tuition costs are currently outpacing inflation and families often have to go deeper in debt to pay for the children’s education. A national survey of 604 parents commissioned by the Canadian Alliance of Student Associations found that one-third are dipping into their own retirement savings to help finance their children’s post-secondary education. The survey, conducted by the polling firm Abacus Data, also found that slightly more than one-third of parents reported taking out a loan and 15 per cent said they had or would be remortgaging their home to help cover their children’s education.
A welcome trend has been the willingness of grandparents to step up with contributions to RESPs (Registered Education Savings Plan). More than 53 per cent of grandparents are saving, or plan to start saving, to help pay for post-secondary costs, according to a recent U.S. study commissioned by Fidelity Investments. We see the same trend occurring in Canada as well.
Grandparents often have the means to help and see this as an “investment” in their grandchildren’s future. It is more than just money gifted. They feel that it will be money well spent.
In many cases, grandparents are not just giving money but also taking an active role in planning for higher education. More than two-thirds of survey respondents (69 per cent) said they have talked to their own children about how the family will pay for it, Fidelity reports. The study, conducted last April by the research firm ORC International, surveyed 1,001 adults with at least one grandchild 18 years of age or younger.
Grandparents can make RESP contributions directly into their grandchildren’s RESP. Please contact us should you wish to contribute or start a new RESP for your grandchildren.