Canadian Personal Finance Blog

This is a topic that my family has been talking about, and I suspect this is not just a one post topic, so it may stretch out over the week.

In my case I was very lucky in that my parents paid for my education, and I graduated (in 1986) with no debts (which is depressing knowing that all of the debt I carry now is of my own making, but that topic is really an underlying thematic premise in this journal, so we’ll leave that one aside for now).

My parents and many friends of mine, had to pay for their own education, or finance their education themselves at least. What are the pros and cons of all of this:

Pros of Having Child Pay for Education

• A sense of ownership and responsibility can be instilled in the student. If the student is the one who has paid for something, the student is much more likely to value their education that much more.
• A higher degree of pride in the accomplishment of “doing it yourself”, and being self-made. This may not necessarily be true all the time, but it can be a powerful motivational factor in later life. Knowing you can accomplish goals is important, and this is a very large goal.
• At 18, this child is learning the value of money and the value of the education they are earning. Of the people I know that “did it themselves” they have a very good understanding of money and also how to live on a budget.
• Co-operative programs are available at many Universities and this can be a way to pay for an entire education (or most of it) and they get worthwhile job related experience at the same time.
• If a student takes care of their own school expenses, they are not burdening their family with these costs. This can be a point of pride (and is for a lot of the people I know who paid their own way).

Cons of Having Child Pay for Education

• Students graduating with crushing debt loads, which will drag on their early adult lives. These debts can cause a great deal of consternation and angst in young people’s lives. Sometimes these debts cause a sandy bedrock to build upon, causing more issues later in life as well (financially).
• If a child has to have a part time job during school, can they truly concentrate on school full time?
• A degree can take longer, if there is a need to do a part time job, and thus not be able to take a full course load (or worse, your job causes you to fail courses). Longer period of education, means more costs, means more loans?
• Can the student truly experience the University experience if they are constantly worried about money? (some might argue that in fact, that point is part of the entire University experience (I tell stories of Kraft Dinner being 4 boxes for $1.00, when I was at school)).

So is it better to help or pay for your kids post secondary education? Let’s ask tomorrow.

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.

As my oldest daughter gets closer to University, I am learning more and more about the relatively high cost of post secondary education in Ontario. Last night was an open house for the Ontario Universities and I attended with my daughter, and came away with a few interesting thoughts:

• There are a lot of Universities in Ontario, 21 were at this open house, and this does not include the community colleges.
• University of Western Ontario “Pitch Kid” was the best of the night, he was quick on his feet, polite, but funny and really hit the high points for the kids and the parents. This kid should go into sales, or should get a bonus for the job he is doing. Most of the other presenters were very bland and you could tell reading from a script.
• This is going to be EXPENSIVE, but the Universities are not trying to hide this fact they all mention the price of an education along with their minimum mark requirements, so it is useful for the parents to hear the actual numbers!

How expensive you might ask, well let’s go to my old Alma Mater and have them tell us how much a year at the University of Waterloo might be (Read Here for actual Waterloo Web Site):

• The cheapest first year that you can expect would be in Mathematics with a total cost of Academic costs (books, tuition) adding up to $5,700.00
• The most expensive degree program would be Optometry at $15,200 in Academic fees and books.

How much to actually live there if you don’t live in Kitchener/Waterloo?

• Somewhere from $5,900 to $8700 for the year depending on if you live on or off campus and what kind of meal plan you purchase.

Total costs estimated over 8 months?

• Domestic students : $14,300 to $26,600
• International students: $24,800 to $45,500

Every school talked about financial assistance and bursaries too, but for those of you reading this who have 2 year olds, start thinking about this NOW, NOW, NOW.

• Start an RESP today, and put something in it, anything, to get started (not one of those silly ones from the doctor’s office, go to a bank or an investment house and get a REAL RESP).
• Remember your child is going to be going to school at age 18, maybe do your savings calculations based on that. If your son is 3, you have 15 years or so to get to having somewhere near the $60K you might need to put them through school. No, wait, remember inflation, you are going to need more than that, so think about it.

Some parents out there saying, “My parents didn’t help me get through University”, ok, that is a a valid point, but, how much did University cost back then? Do you want your kids graduating with a student loan load of over $70K?

Other University Related Posts

• Should Parents Pay for University?
• The Costs of University
• University is Going to Cost How MUCH?