Canadian Personal Finance Blog

Is there a right way to deal with the question of whether a parent should pay for a child’s post secondary education or whether the child should be left to pay for a University Education (and left with a large debt load in student loans)?

I think that is a pedagogical question since most of the times the parents financial situation is what dictates how much parents can help their children who want to get a post secondary education. I find it rare that parents who can help their children with their post secondary education, don’t help out in some fashion or another. I do know of some children who have refused help from their parents, out of pride or other reasons, but that is a rarity as well.

Some of the comments I have received have been very interesting, and I want to thank all of my reader’s who contributed (and those who de-lurked for me as well).

• A large number of comments agreed with my opening statement that it is very rare that parents who can help, choose not to help out their children who choose to try to get a University Education, it usually comes down to whether the parent is in a position to help or not.
• Michael James commented:
  

  I plan to pay for the basic necessities for my kids initially, and am hoping that they earn enough to take over by the end. I’m not paying for any extras, though. Meal plan, residence, books, and tuition are necessities.

  I think that point of view is a healthy view point, and fair. The extras he comments on, I think are part of the “College Lifestyle”, but then again, should a parent be expected to pay for them?

• Trent commented:
  

  And I would say emphatically, if the student in question never had a job during high school, then I think you would be doing a great disservice to them by allowing them to wait until they graduate college before punching their first clock.

  Which is very much the “Christian Work Ethic” espoused by many parents and grandparents. I think I agree with that comment as well.

  As a personal aside, I worked delivering Telephone Books one summer, loading trucks another summer and had a paper route from age 13, so on those days at University when I thought, I am going to chuck this whole thing and get a “real” job, I just remembered heaving bundles of Penthouse into the back of Grumman delivery trucks in 30 Celsius heat, and it was amazing how well it motivated me.

• Nerd Money Commented:
  

  I think one possible solution in terms of funding is that you loan out any funds you’ve set aside for their education. Set it up like a government funded loan where there’s no interest while they’re in school and then a modest interest rate payable to “The Bank of Mom and Dad” six months after graduation.

  Interesting concept, that I don’t know if I agree, but it is another way to teach the value of the money spent on the education (remember the infamous Singing Horse parable for possible pay back solutions).

• Steward’s of Wealth had another perspective:
  

  We don’t have kids. But one thing that we will teach them is how money works. One of our goals is to teach them how to invest. Hopefully, by the time they get to college, they’ll already have assets paying for tuition.

  Didn’t really say if they were going to help or not, and unless my kids find a penny stock to invest their funds, it’s less likely they’ll be able to pay off their tuition, but a worthwhile learning experience, although what happens if they invest badly (like I would have)?

• Nancy (aka Money Coach)’s comments really hit home for me:
  

  I was driven, got the A’s but it wasn’t nearly the experience it could have been if I had been funded. Then I graduated with a debt that took 10 long years to pay off, and significantly hampered my ability to get ahead (and most readers know the effect of compound interest = opportunity cost for me).

  I read that and understand more what the costs of Student Loans can do to newly graduated students.

• Amy (my de-lurker) comments were again very good:
  

  I graduated with a BA in 2003 with very little debt. I worked like crazy every summer (maybe taking 2-3 days for a camping excursion with friends every summer but that was it). I also worked most Saturdays during the school year. Seeing as I attended a Christian university here in Ontario, my earnings didn’t stretch as far as I would have liked, so I applied for DadSAP:) My parents were in a position to help me out, and I’m very grateful for that. I gave all I could towards my education and my parents paid the rest.

  DadSAP == The Bank of Mom and Dad, but it’s the same idea. Any child who works hard and realizes that as the oldest they need to help their parents because their brothers and sisters will want help too, is ok by me!

• Another interesting comment I got from an acquaintance who has many kids (more than 7 I believe) who told her kids, “You are going to University, Your Parents aren’t going to be able to Help, but You are going”. I think if kids are aware of the ground rules early, they are more likely to figure out what they need to do early on as well.

Thanks to all commenters and readers, this was an excellent bit of research for me to understand how other folks view this dilemma. I am lucky to have gotten my scholastic ride for free (as it were), and hope to help my kids as much we can.

I have written about this one, but I continue to be unhappy with the situation that I currently find myself in, in terms of hidden school costs. I don’t really mind too many of the charges, since in most situations I am either paying for my child’s extra curricular activities or I am paying for convenience (i.e. a hot lunch program), and I don’t even mind too much some of the “user fees” imposed (for wood in shop classes and such).

I do however have a problem with the $179.25 I pay a month to bus my kids to school. So here are the facts:

• All 3 of my children attend schools that are not easily within walking distance of my house (one is about 3 KM from the house, and the High School my two older daughters attend is about 14 KM from the house).
• Due to board rules there is no free busing offered to my kids (there is busing in some situations, but due to rules, we are not eligible for them).
• I do claim the bus passes I buy on my taxes (so I do get money back from this).

The price of these bus passes is almost enough to buy a used car. I have talked to my School Board trustee and my local MPP about this, and while they are sympathetic nothing much will be done about this.

My two oldest attend a school much farther away, because my oldest’s program is there (she is in a specialized program) and it was easier to have my middle daughter there as well (so yes, you could discount my bitching by 1 child if you wished). Next month my youngest will go back to biking to school as well (whether she wants to or not!!!).

I can afford this (it hurts, but I can) and the tax rebate softened the blow a great deal too, but how do people who can’t afford this deal with these costs? I think the simple answer is they don’t have the options I have I guess.

Always talk nicely to the Police Officer

Off topic, but still in a financial vein, always remember that when you are stopped by a Police officer for speeding and you KNOW you are speeding, be polite, apologetic, and contrite. Tomorrow, I will explain more.

As a nice early birthday present for my daughter she has been accepted (early) at her #1 and #2 University choices. She is very proud of this, as am I, but now comes the interesting questions about how is this all going to get paid for?

Every University that she has applied to has asked very specific questions about my income, to see whether she qualifies for any kind of financial assistance. When I say specific, they ask for actual values from specific lines in my income tax return, which is about as specific as it gets. Never looked closely to see what rules all this information was being held under, and how safe it all might be, maybe I’ll check into that.

Her #1 choice has already offered her a small first year scholarship, which may grow, simply due to her good grades (and if her final grades are higher, an even higher amount might be available). This is nice to see, and they also sent a preliminary budget of what they think the costs for first year might be (gulp), so that needs to be looked into as well. We also need to investigate what other possible scholarships or bursary programs might be available.

The most interesting thing I need to check into now, is what to do about her RESP. I know that once I start drawing on it, the CESG stops coming in, if I put more money in, but what if she is at school and I don’t draw from it? This question vexes me still, and I must investigate further.

More financial scrutiny and diligence is needed in this area (and any helpful comments or suggestions would be great from my readership as well). I will keep you all posted, as I suspect I am going to make a few interesting mistakes that others might benefit from learning about.