For many a Canadian parent, it’s the case of the mind is willing, but the cash is weak. When it comes to funding kids’ education, there seems to be a gaping divide between what parents want to do and what they can afford, according to the TD Canada Trust Education and Finances Survey.
The study exposes a contrast between intentions and action, finding 87% of parents plan to pay all or part of the costs of their child’s post-secondary education, but finds 26% have yet to start saving and another 15% are clueless about how they will finance it.
“While the long-term benefits of a post-secondary degree are significant, so is the price tag,” says Lawrence Engel, vice-president, personal lending, TD Canada Trust. “Ideally parents should start putting money away for their children’s education when their kids are young, but if they haven’t saved, or saved enough, there are flexible, cost-effective options that can help.”
The study shows 10% of participants intend to use either credit cards or their line of credit to pay for their child’s education.
Another report by TD Economics shows that in 2009, the cost of a four-year undergraduate degree was more than $80,000 for students living away from home.
Nearly half (48%) of parents in the TD Canada Trust Education and Finances Survey say they will pay for most of their child’s education, while 29% say they will pay for the essentials like tuition, books and rent, but expect their child to pay for all other expenses. Only 10% plan to pay for all of their child’s expenses.
The large majority (70%) of those who say they feel good about helping their kids out also feel it is important that the kids chip in their bit, too. Twelve percent of parents say that they feel it is their responsibility to pay for their child’s education and another 12% say it would be a good experience for their children to pay their own way.
The study reveals similar results in Quebec, although the gap between plans and preparedness was found to be wider among Quebecers. While 89% of parents in Quebec say they plan to pay all or part of the costs of their child’s post-secondary education, 44% say they have yet to start saving and another 21% have no idea how they will finance it.
The research is complemented by an RBC/Ipsos Reid poll that shows 57% of post-secondary students plan to work during the school year in order to help pay the bills. But the stress of working part-time creates stress and takes a toll on their grades, say those polled.
Three-quarters of students (77%) believe working part-time during school will impact their grades, while six-in-10 expect to graduate with debt and 74% don’t use a budget.
“The student experience brings newfound responsibilities like keeping good grades, living on your own and balancing a budget which can be very stressful,” says Kavita Joshi, director, student banking, RBC. “Proper saving habits can lead to working fewer hours, thereby freeing up more time for studying and enjoying the university or college experience.”
Joshi says preparing a budget, taking control of finances, and knowing various financial options available can help students stretch their dollars.
(08/16/10)