A recently released CIBC poll shows that four out of five Canadian parents could not correctly estimate the average costs of post-secondary education. As a new university and college cohort prepares to enter into student life, this data presents some worrying conclusions about the way we conceptualize and plan for the financial requirements of education.
The survey found that only 20 per cent of parents correctly gauged the cost of post-secondary education tuition at between $6,000 to $9,999: on average, tuition for an undergraduate degree costs $6,191 per year, according to the most recent data from Statistics Canada.
Moreover, 37 per cent of parents said they had no idea how much to budget for non-tuition expenses, such as books, supplies, groceries and accommodation.
There is a fundamental disconnect between the expectations that parents hold and their ability to plan for the costs of education. In a 2015 HSBC survey, more than two-thirds (68%) of Canadian respondents said that they expect their child to help finance their own post-secondary education – the highest percentage across all markets surveyed and well above the global average of 40%. Also, 84% of Canadian parents polled by HSBC said that they believed the improvement of financial responsibility would be an important benefit of a post-secondary education for their children.
How do we bridge this gap? Realistic foreknowledge of the costs – both direct and indirect – associated with post-secondary education can be estimated at around $25,000 per year. Taking this knowledge into account in long-term budgeting and planning will be essential to avoid putting pressure on families’ financial plans, or loading students with unsustainable amounts of student debt. Maximizing the benefits afforded by RESP contributions and the Canada Education Savings Grant will be important for any family looking to send a child to post-secondary education, as will the maintenance of budget awareness and personal financial/savings skills for both parents and their student children.