Money & Career

Can You Afford to Send Your Kids to College?

Four tips (free-money!) to help you save for tuition


As a parent it’s hard not to worry about how you’re going to pay for your kid to go to university – especially when the cost of  a four-year degree is projected to top $130,000 in just 18 years (right when your baby is headed off to school!).

In the face of such numbers, it’s easy to despair. But you don’t have to – with a little bit of know-how, some free money from the feds, and a reality check with your kids, there are a few tricks that can take away some of the financial pain.

Get free money. That is, if you start saving through an registered education savings plan (RESP). It’s a special savings account that lets your savings grow tax-free. But the best thing about opening an RESP for your child is that it makes you eligible for the Canada Education Savings Grant (CESG). It matches 20 percent of your RESP contributions on an annual basis to a maximum lifetime grant of $7,200 per child. So, if you put in $500 in the first year, the government will give you an additional $100 in grant money. This is one big leg up when helping your kids pay for college or university.

Get more free money! The Canada Learning Bond (CLB) – For kids born in 2004 or later, the Canada Learning Bond is another source of free money to put towards your child’s education – in fact, it can be paid directly into an RESP. It’s worth $500 the first year you have it and $100 for each subsequent year until your child is 15 – a total of $2,000. If you get the Canada Child Tax Benefit, you automatically quality for the CLB.

Do a reality check. Parents put a lot of pressure on themselves to foot the entire bill for their child’s education. And that’s not a great idea – even if you can afford it. It’s important that your kids understand the reality of how much an education costs and what its value is. And they should contribute to the costs, either through summer jobs or a job during the school year. The key is to sit down early with your kids – talk about how much you are prepared to pay for and how much they will be expected to contribute.

They don’t have to go to Harvard. While you want your kid to get the best education, he or she might have to make some choices about where to go based on finances. Talk to your kids about options like scholarships, grants and perhaps sticking to a school close to home for their undergraduate degree to cut costs related to room and board.

Caroline Cakebread is a Toronto-based financial writer and editor. She’s also a recovering academic and the mother of two kids. Check out her personal finance blog for Chatelaine Your Money.

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