Start them off right, or that nest may not be so empty
TD Economics pegs the total average cost for a four-year undergraduate degree while living away from home at $84,000
TORONTO, August 9,
2012 – With the total average cost of pursuing a four-year undergraduate degree
while living away from home at $84,0001, the ability for parents to
save enough to pay for their child’s studies can be challenging. As a result,
students are taking on more debt – averaging $27,7472 for a
graduating university student – and parents are more likely to find themselves
with their grown children back home due to financial reasons.
a four-year degree can be very difficult, especially for parents with more than
one child,” says Shahz Beig, Associate Vice President, Personal Lending, TD
Canada Trust. “Even if parents can’t afford to pay for all of their children’s
studies, they can still help them graduate with less debt by teaching them how
to fund and manage their finances for post-secondary education.”
many parents, helping their children prepare academically for their school of
choice is the main focus. But the finances catch up fast. Regardless of when their
children are heading off to school, Beig says putting a financial plan in place
is critical. He provides advice on how to responsibly fund post-secondary
education and repay debt after graduation.
Paying for school
education can be the first major expense that younger Canadians have, and the
greatest next to buying a home or saving for retirement,” says Beig. “That’s
why it’s important for parents to talk to their kids well in advance of college
or university about what they can realistically contribute, how much they
expect their kids to contribute and what options are available if they haven’t
Beig shares three smart
ways to help fund post-secondary education and avoid excessive student debt.
RESP: One of the best
ways to save for post-secondary education is by taking advantage of a
registered education savings plan or RESP. RESPs allow savings to grow
tax-deferred, and earnings, when withdrawn for education purposes, are taxed at
the student’s tax rate. Government grants are also available to increase
Bursaries and Grants: Once you know how much you will be able to save and how
much you need, the first place to look for additional funding is through
scholarships, bursaries and grants. Research what’s available well in advance.
Encouraging your child to get a summer or part-time job can help build
additional funds for post-secondary education, while helping students gain valuable
skills and experience.
For those still
facing a financial gap between what they have saved and the costs of
post-secondary education, a student line of credit can help ensure students
have access to money to cover tuition, books or living expenses, adds Beig.
with debt may be unavoidable for many students, some options are better than
others when it comes to financing post-secondary education,” says Beig. “A
student line of credit provides a more cost-effective option than a loan or
credit card as it offers a lower interest rate and more flexible repayment
terms. The key is to use it responsibly to avoid drawing down funds for expenses
that aren’t really necessary.”
Setting your kids free from debt
“A good financial
plan should not only include helping your child save and pay for post-secondary
education, but should also focus on managing debt after graduation,” says Beig.
To help pay off student debt and get back on track financially, Beig provides
these tips for graduating students:
- Meet with a financial advisor to
create a plan to manage your student debt, regardless of your income.
- Protect your credit rating by always
making debt payments by the due date and paying at least the minimum
amount. Use a pre-authorized payment plan to ensure payments are never
- Pay down your debts as fast as you
can. Focus on higher interest debt first, like credit cards.
More information on
financing post-secondary education can be found at: tdcanadatrust.com/student.
About TD Canada Trust
TD Canada Trust offers personal and
business banking to more than 11.5 million customers. We provide a wide range
of products and services from chequing and savings accounts, to credit cards,
mortgages and business banking, to credit protection and travel medical
insurance, as well as advice on managing everyday finances. TD Canada Trust
makes banking comfortable with award-winning service and convenience through
24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100
branches, with convenient hours to serve customers better. For more
information, please visit: www.tdcanadatrust.com.
Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.
For more information, contact:
TD Bank Group
University Survey Consortium Graduating Student Survey 2009
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