Beyond tuition – will you be ready for the real costs of a post-secondary education?August 3, 2004
The value of a post-secondary education is clear: the average university graduate earns almost twice as much as someone who has a high school education*. That is a tremendous amount of increased earning potential, but it comes with an increasingly steep price tag. According to Statistics Canada, the average university tuition for the 2003/04 academic year is $4,025** -- nearly three times what it was in the early 1990s.
Will you be ready financially when your child is ready for college or university? Here’s a look at the total projected cost of a four-year undergraduate degree for a child born this year who will attend school away from home.
Expense Item |
Today’s Cost |
2022 Cost |
|
Tuition |
$16,100 (average for a four-year degree) |
$64,336, assuming costs increase at 8% annually |
|
Books and supplies (Students in specialized or professional university courses will require additional funds for the purchase of books, instruments and supplies.) |
$1,000 per year or $4,000 based on a four-year degree*** |
$6,809, assuming costs increase at 3% annually |
|
Additional compulsory fees for learning material, athletics, recreation facilities and student government |
$2,492 (average based on a four-year degree)** |
$4,242, assuming costs increase at 3% annually |
|
Board and lodging |
$5,250 (average) per year or $21,000 based on a four-year degree *** |
$35,750, assuming costs increase at 3% annually |
|
Utilities, telephone and food |
$3,000 per year or $12,000 based on a four-year degree *** |
$20,429, assuming costs increase at 3% annually |
|
Transportation |
$1,200 per year or $4,800 based on a four-year degree*** |
$8172, assuming costs increase at 3% annually |
Approx. total costs |
$60,392
|
$139,738 |
When you add up these and the other costs of a post-secondary education – such as the need to buy a computer and software, the costs of gifts and hobbies, and perhaps the desire to purchase a vehicle – it’s easy to see why tomorrow’s education likely will be much more expensive than today’s. Fortunately, there is a way to cope financially with future education costs whatever they may be – it’s called a Registered Education Savings Plan (RESP).
With an RESP a parent or grandparent can make contributions on behalf of children or grandchildren and the contributions grow on a tax-deferred basis. The contributions themselves are not tax-deductible and there are annual and lifetime limits per child. Additional benefits are available through matching federal government grants*** that can accelerate your education savings.
Tomorrow’s education is bound to be expensive. Be prepared by beginning to save now. Your financial advisor can help you set up an RESP and recommend the portfolio that meets your individual needs.
* Statistics Canada, 1997, 2003
** The Daily, Statistics Canada, August 2003, Catalogue 11-001-XIE
*** Canada Education Saving Grants are provided by Human Resource Development Canada
**** Ontario Government, Ministry of Education, Ministry of Training, Colleges and Universities Website, www.edu.gov.on.ca, June 3, 2004
Canada Education Savings Grant and Canada Learning Bond (federal grants) are provided by Human Resources and Skills Development Canada
This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.
