It has been a while since I graduated from Thompson Rivers University. Back then, it was University College of the Cariboo. I remember late night studying, numerous essays, group projects and winging the odd exam.
I can't recall exactly what tuition cost, but I remember it going up each year. Fast forward to today, when Amanda and I are saving for our kids' post-secondary education, which got me curious on the potential costs.
What does it cost?
University costs often include tuition, mandatory fees, books and possible housing costs. According to Stats Canada, the average tuition cost alone in Canada is $6,693 for 2021/2022.
Good news in BC: Since 2005, the provincial government has limited tuition increases to two per cent a year. Compare this to Alberta, which recently removed the tuition freeze and now allows increases up to seven per cent a year for the next three years, or 21 per cent in total.
Mandatory fees are university fees and student society fees. University fees can include registration, library and lab fees and are also subject to the two per cent cap in BC. Student society fees can include Canadian Federation of Students and student union building fees, as well as optional health and dental. These are not subject to the two per cent cap.
All in, Stats Canada estimates that the national average cost of a four-year degree is $48,074.
Costs can soar if you have to move away to attend a university, often in larger, more expensive cities. A general guideline is to double the costs in this case.
How to pay for it?
In a 2018 Maclean's study, half of students surveyed were in debt and the study found graduates of a university degree amass roughly $66,000 in student loans. The rest of the costs are typically covered by students working part-time, scholarships and bursaries and parents.
For many parents and grandparents, helping kids with their education is a priority. In a previous article, we encouraged parents to plan ahead and leverage 20 per cent government grants associated with registered education savings plans (RESPs). We continue to believe this to be a great savings tool.
If a parent saves $250 a month in an RESP for 17 years, earning four per cent, they would maximize available grants and could amass $80,846 toward their child's future education.
Rules surrounding RESPs have improved significantly over time and eligible programs include courses that last as little as three weeks and have at least 10 hours of weekly instruction.
Is it worth it?
According to Stats Canada, whether post-secondary education involves a trade, diploma or degree, on average, graduating students earn more. They quantify a degree earns on average 47 per cent more income for men and 58 per cent more for women. Keep in mind that these are averages and exceptions exist.
The landscape for the next generation continues to evolve at an incredible pace. One of the best ways we feel we can help our kids prepare for it is to invest in their education.
As Benjamin Franklin once said:
"An investment in knowledge pays the best interest."
Until next time, Invest Well. Live Well.
Written by Eric Davis. The views expressed are those of Eric Davis, senior portfolio manager and senior investment advisor, and Keith Davis, associate investment advisor, TD Wealth Private Investment Advice, as of June 29, 2022, and are subject to change based on market and other conditions. Davis Wealth Management Team is part of TD Wealth Private Investment Advice, a division of TD Waterhouse Canada Inc. which is a subsidiary of The Toronto-Dominion Bank.