With the mounting costs of post-secondary education, and rising student debt, it’s more important than ever for parents to try to plan ahead to gather education savings. And even if your little one is only just starting school, the time is now to get those savings going. But what is your plan? Do you know what your options are?
According to a new poll from CIBC, many parents in fact are not only unaware of their options; they are missing other key pieces of information.
Highlights from the poll include:
- Parents are in the dark when it comes to the actual cost of tuition. 22 per cent overestimate the cost; 27 per cent underestimate the cost and 27 per cent say that they don’t know at all.
- Tuition is only one of the expenses associated with school, and 37 per cent say that they don’t know how much to budget for other costs, like books, school supplies, groceries and accommodations
- Despite these specific and important gaps in knowledge about the costs, 81 per cent of parents indicate that they feel like they have a good handle on post-secondary costs
- Thirty-nine per cent of parents of recent graduates or children currently in school say that costs were more than expected
“With the costs of post-secondary education continuing to rise, student debt is beginning to creep to concerning levels. The best way to counter that student debt is to offset it with savings; and for this strategy, you need to start right away,” says Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.
“It’s important to start saving early; it’s also important to nail down the costs. The sooner you start, the more money you’ll have. The more money you have put away, the less student debt your child will be saddled with at graduation.”
Here are some tips on how to get started:
Make saving a habit
No matter where you decide to put your savings, savings is easiest if you can do it seamlessly. Look into automatic deductions either through your bank or through your employer into an account that you specifically create for education savings.
Explore your options
Consider investing the money you accumulate into a Registered Education Savings Plans (RESPs). Money you put into an RESP grows tax sheltered. And the best part? The government matches your contributions up to $500 a year.
There are other options available as well, like a straight savings account, GICs or Savings Bonds.
Get a handle on expenses
Determine what post-secondary education costs are today, and set up a budget, including all costs (tuition, books and living expenses). Don’t forget to add something in for what these costs will be when your childe does go to school.
Would you like to be able to save more money, but can’t find room in your budget? Did you graduate with student debt that is keeping you from getting ahead? We can help you turn your life around. Call one of our trained credit counsellors at 1-888-294-3130 or get started with our online debt analysis.