Invest well. Live well: invest in the future generation

It has been a while since I graduated from Thompson Rivers University. At the time, it was the University College of the Cariboo. I remember studying late at night, lots of essays, group projects, and taking a few exams.

It has been a while since I graduated from Thompson Rivers University. At the time, it was the University College of the Cariboo. I remember studying late at night, lots of essays, group projects, and taking a few exams.

I don’t remember the tuition fees exactly, but I do remember that they were increasing every year. Fast forward to today, when Amanda and I are saving for our children’s post-secondary education, which intrigued me as to the potential costs.

How much does it cost?

University fees often include tuition, compulsory fees, books and any accommodation costs. According to Statistics Canada, the average tuition fee in Canada is just $6,693 for 2021/2022.

Good news in BC: Since 2005, the provincial government has limited tuition fee increases to 2% per year. Compare that to Alberta, which recently removed the tuition freeze and now allows increases of up to 7% per year for the next three years, or 21% in total.

Mandatory fees are university fees and student association fees. University fees may include registration, library and lab fees and are also subject to the 2% cap in British Columbia. Student society fees may include Canadian Federation of Students and student union building fees, and optional medical and dental fees. These are not subject to the 2% cap.

In total, Statistics Canada estimates that the national average cost of a four-year degree is $48,074.

Costs can skyrocket if you need to move to attend college, often to larger, more expensive cities. A general guideline is to double the costs in this case.

How to pay it?

In a 2018 Maclean’s study, half of the students surveyed were in debt, and the study found college graduates amass about $66,000 in student loans. The rest of the costs are usually covered by students working part-time, scholarships and parents.

For many parents and grandparents, helping children with their studies is a priority. In a previous article, we encouraged parents to plan ahead and take advantage of the 20% government grants associated with Registered Education Savings Plans (RESPs). We continue to believe this is a great savings tool.

If a parent saves $250 per month in an RESP for 17 years, earning 4%, they will maximize the grants available and could save $80,846 for their child’s future education.

The rules surrounding RESPs have improved considerably over time and qualifying programs include courses that last as little as three weeks and involve at least 10 hours of instruction per week.

Is it worth it?

According to Statistics Canada, whether post-secondary education involves a trade, diploma or degree, on average, graduate students earn more. They quantify that a diploma brings on average 47% more income for men and 58% more for women. Keep in mind that these are averages and there are exceptions.

The next-gen landscape continues to evolve at an incredible pace. One of the best ways to help our children prepare for it is to invest in their education.

As Benjamin Franklin once said:

“An investment in knowledge generates the best interests.”

Until next time, invest well. Live well.

Written by Eric Davis. Opinions expressed are those of Eric Davis, Senior Portfolio Manager and Principal Investment Advisor, and Keith Davis, Associate Investment Advisor, Private Investment Advice, TD Wealth Management, as of April 14, 2022, and are likely to change based on market and other conditions. The Davis Wealth Management team is part of TD Wealth Management Private Investment Advice, a division of TD Waterhouse Canada Inc., which is a subsidiary of The Toronto-Dominion Bank.

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