If you are planning on trying to help your kids out with their University costs (or other post-secondary ideas), an RESP is a must (just for the free money), however, that is not the only way to ensure you can easily help out your kids reach their educational dreams (or your dreams for their eduction).

I have learned after 8 years of paying for children’s expenses for school, that the most debilitating university costs are not tuition, it is the cost of accommodation. At one point in the 8 years I was

• Paying the mortgage on my house
• Paying rent of 3 separate apartments across Canada

When did I become so rich that I could afford this (you might ask)? (sarcasm alert) I most assuredly did not, the RESP money helped somewhat, but these kind of costs can almost double your family living expenses. Living expenses for your kids at school really do add up.

There are remedies for this kind of expense (luckily):

1. Do not allow your child to move away from home while they are going to University. Whether you really want to inflict this on yourself, is a question you must ask, but that will eliminate many of the living expenses. I know at least one set of parents that said, “I will pay for your tuition, and give you a car to use, if you stay at home. If not, it is all on you.”
2. Pay off your house before your kids get to University, that way you are rich enough to be able to pay for the rent on “N” different apartments (or residence rooms) (where N is greater than 1).
3. Make your kids pay for their living costs.
4. Make your kids pay the whole shot. They want an eduction, time to learn about money at the same time.

Option (2) on the list is a very good target to try to hit, but kind of hard if you are maxing out your RESP, TFSA, and RRSP savings targets as well, but still something to keep in mind!

Options (3) & (4) sound heartless, but I know plenty of folks who paid for their entire University career, because their parents couldn’t help out, and they seem to have survived.

Keep in mind, University costs are not just tuition costs.

For those of us who have kids about to return to University we are about to see the onslaught of fees that are charged by all Universities (in Canada). University fees continue to be become more and more intricate, complicated and expensive.

There are many fees being charged, but the two that caught my eye (on my daughter’s university fees bill from Queen’s University) were:

For those who do not want to do the arithmetic, that is $500 for 4 months.

Don’t see any beer taxes on the tuition bill (luckily)

Remember that if your child is in school your health insurance plan covers both Health & Dental (if you are covered that is), so you really don’t need to pay this fee, and most universities will allow your child to opt out of the charges (which seem quite high to me). I have checked with our friends at LSM Insurance who think the fees are a little high, but not too bad. Another factor to take into consideration is that a lot of Health Plans have positive enrollment clauses (I am with SUN Life for health insurance and that is the case), where you must every year (after a child turns 19 I think) go to the Insurers web site (or send in a form) stating that your child is still at school, or the child loses their coverage under the plan.

How easy is it to opt-out of the health and dental in the university fees schedule ? At most schools, not as simple as you might think, and deciphering which fees are optional, and which are mandatory is a real quagmire of data.

I remember folks opting out of fees when I was at University, but typically those were the folks that were paying their own way, and didn’t want to pay for things they weren’t going to use.

What are some other fees from Queens University ? These add up to almost 25% of the tuition bill we are paying (note that residence or living expenses are not here either). Still think you won’t need an RESP to help your kids go to University? I’d also like to remind those with younger kids that there is no legislation limiting the fee levels (tuition yes) or how much they can increase.

Let me preface this, that this is a Guest Post from a group of chaps I tripped over a while ago. Sounds like an interesting idea to me teaching folks about the costs of University, they are looking for feedback, have a read and see what you think.

Feels like cheese

by Alfred Yang

For those of you who lived through the 90’s, remember that old Cheese Whiz commercial where kids are reluctant to eat their vegetables until they’re garnished the amazing product? Well, that commercial kept replaying in my head as I worked on Proliteracy.ca, a free tool that helps Canadians plan finances for post-secondary education.

I can’t help but get the feeling that personal finance education is a lot like vegetables.  We all know it’s good for you, but it isn’t that appealing, especially to young people.  I feel like our team at Proliteracy.ca is trying to create the secret sauce that makes something dry and boring more consumable.

Fortunately, from the start of our journey we’ve met many organizations and individuals who share the same passion for promoting financial literacy.  Subject matter experts in the field of personal finance, like Big Cajun Man, gave us the motivation to continue our work.   Today, Proliteracy.ca is available to all Canadians looking to understand post-secondary financing.

The secret sauce?

Despite the rapid evolution of financial technology, it has yet to change the way most consumers educate themselves about personal finance.  The internet gives us incredible access to information, but it can be overwhelming.  The Proliteracy.ca team wanted to find a way to help people filter through the noise to focus on what’s really important to their own situations.

Our team wanted to start by helping students and young parents, a demographic that is arguably the least motivated to learn about personal finance.  Ironically, most members in this very same demographic have a major financial hurdle to overcome – financing post-secondary education.  Tuition has been increasing steadily in the past two decades and according to the Canadian Federation of Students the average new grad from university owes over $28,000 in student debt.

Through extensive research, we found plenty of information on financing post-secondary education, but when considering our own personal situations, a number of questions still remain unanswered:

• If I have a young child today, how much should I be saving towards?
• How does studying in a different school or different city impact my cost?
• How much money should I set aside each month so that I am not too late by the time my child is ready for college?
• Beside savings, what other financing options are available?
• How does borrowing impact my child’s financial future?

Our Goals

Proliteracy.ca aims to help forecast the cost of education based on each student’s personal situation. We do the heavy lifting to organize data that’s freely available so that it’s more accessible and easier to understand.

First, we prompt you to answer a few questions, including programs and schools of interest, and the year of enrollment. Then we forecast the cost of tuition, books, and other expenses based on historical data. The end result is a good estimate of the financial target you or your family should be aiming for when planning for post-secondary education.

With an understanding of cost, we’re able to suggest a variety funding options starting with the least expensive options: savings, grants and scholarships.  We build awareness to great federal programs like the Canadian Learning Bond (CLB) and Canadian Education Savings Grants (CESG) and highlight the impact they have on RESP savings.  We also perform grants and scholarships matching, allowing families to take advantage of resources that are otherwise unknown to them before taking on debt.

Eat your vegetables, they’re good for you

In October, we ran a pilot program at three different high schools in the Greater Toronto Area.   We found that students and many young parents are generally not motivated to learn about personal finance. Most are not prepared for the high cost of post-secondary education.  Tuition is increasing well beyond the rate of inflation, and a child’s college or university education a decade from now could easily set a family back by over six figures.  Most individuals we spoke to admit that they are planning finances for post-secondary education too late.

Like eating vegetables, financial planning needs to start early in life.  When confronted with a significant financial hurdle like cost of post-secondary education, families need to get into the rhythm of saving, learning about funding options and understanding the implications of debt.

We need your help

Since our pilot launch, we’ve received a lot of encouragement and feedback on how we can improve. While our team is making great strides towards creating an amazing planning tool, we can get there a lot faster by working with individuals and organizations who share the same passion for financial literacy.

So, if you have any feedback at all, we’d love to hear from you.

www.proliteracy.ca

If your child is starting Junior Kindergarten this week (or next), and you have not opened an RESP for them, can I ask why you haven’t?  Go to my RESP page, and read some of the stories there about how simple it is to open this kind of account, and how helpful it can be (and how much of a pain it can be to extract your money), but if you think your child has a chance of going to a post-secondary program, you need to start saving right now.

Those Tuition Fees do fly high like #7 in this photo!

Some provinces are talking about changing their “student loan” system so that there are more grants given out, but I suspect the business of post-secondary education is going to keep out-stripping inflation for a good long time.

I must however warn you off many of the RESP savings systems offered by many of the banks especially those that only allow you to purchase the banks “value added” mutual funds, and yes, there is going to be another rant about this real soon now. Find somewhere that does not have a lot of extra fees, where you can grow the money you get from the government, because it is not going to be enough, to pay for a full education. Interesting that one Insurance company that had a Giraffe as their mascot, seems to have gotten out of the RESP business?

Start saving for that education, if you plan on paying for it, if not, relax and enjoy the upcoming NFL season, or maybe the playoffs?