Parents are willing to pay for majority of their children's college or university costs, expected to be around $64,000 per child, but their kids think they are only covering a third of the tab
TORONTO, Aug. 25, 2014 /CNW/ - Two new polls from CIBC (TSX: CM) (NYSE: CM) show that Canadian parents and their kids are on different pages when it comes to financing post-secondary education.
Parents, on average, are willing to pay for two-thirds of their children's post-secondary education and some are planning to pick up the full tab. Their kids, however, think their parents are only paying for a third of their costs. The good news for parents is that 41 per cent of their children think even that is too much and say their parents should contribute 25 per cent or less.
Key poll findings include:
"Parents and students need to understand the cost realities of post-secondary education and in many cases what each will contribute to share the expenses," says Marybeth Jordan, Managing Director and Head, CIBC Investor's Edge. "Part of the disconnect between parents and their children is likely that students aren't accounting for all of the costs beyond tuition. That's why the conversation between parents and students about the full costs of education, and how to pay for it, needs to start long before the first tuition payment is due."
"While it's clear from our polling that parents want to help pay for their children's post-secondary education, in most cases they are taking on the lion's share of a rapidly rising expense - and covering far more than their kids realize," adds Ms. Jordan.
Parents and students need to prepare for the cost realities of post-secondary education
A recent CIBC poll found that students are finding it difficult for students to cover their own education costs due to both a tight labour market and the rising costs of post-secondary education in Canada. Tuition costs alone have increased by 44 per cent in Canada over the past decade, according to the Canadian Centre for Policy Alternatives.
"Given that parents today expect that it will cost about $64,000 to put each child through school, it is extremely difficult to play catch up on an education fund when their kids are in high school," says Ms. Jordan. "It's important for parents to include education in their overall financial plan and start making contributions, no matter how small, while their kids are young."
"Not having a plan can compromise their own financial priorities of paying down debt and saving for retirement," she adds.
Tips to help manage education costs:
- Build an education plan - Parents should consider the real costs of post-secondary education and build a savings plan that outlines how much the student will cover and how much the parents will contribute.
- Use a Registered Education Savings Plan (RESP) - An RESP builds education savings faster, taking advantage of the Canada Education Savings Grant to grow your investment. CIBC Investor's Edge was the first bank-owned self-directed brokerage to remove administration fees for RESP accounts, helping parents to start small and save more for their children's education.
- Start the conversation early - Parents and students should discuss post-secondary education goals to understand if the student intends to pursue higher education and, if so, whether they plan to attend college or university and whether they will stay at home or go away to school.
- Create a budget - Having a financial plan in place for students before school starts can help make the most of your resources. Use the CIBC online Budget Calculator to get a clear picture of all your expenses, and how much you have to spend.
- Track spending - Use the CIBC Mobile Banking App to see account transactions and balances in real time. Services such as CIBC CreditSmart® can also help students stick to their budget, by allowing them to set a budget limit on each spending category on their credit card, and be notified by phone, email or online message when they exceed their customized budget.
- Student Banking Offer - CIBC offers a bank account for students with unlimited transactions and no monthly fees. A CIBC student bank account makes student life simple and provides peace of mind that their everyday banking won't lead to unexpected charges.
KEY POLL FINDINGS The average percent that parents with children under 25 in Canada plan to pay for their child's post-secondary education:
The average expected cost that parents with children under 25 in Canada think their child's post-secondary education will be:
The sources by which college and university students in Canada expect their post-secondary expenses will be paid:
|Students, through their jobs||33%|
|Parents or other family||33%|
|OSAP / Government loan||18%|
|Scholarships or bursaries||10%|
|Personal loan / line of credit||4%|
The percentage which college and university students think their parents should contribute to their school expenses:
|Between 0 and 25%||41%|
|Between 26 and 50%||27%|
|Between 51 and 75%||15%|
|Between 76 and 100%||16%|
Leger conducted an online survey of 1,056 Canadian parents with children under 25 between July 21 and 23, 2014 and 500 Canadian university or college students between July 10 and 17, 2014. The survey of parents has an associated margin of error for a probabilistic sample of the same size of +/-3.1%, 19 times out of 20. The survey of post-secondary students has an associated margin of error for a probabilistic sample of the same size of +/-4.38%, 19 times out of 20.
About CIBC CIBC is a leading Canadian-based global financial institution with nearly 11 million personal banking and business clients. Through our three major business units - Retail and Business Banking, Wealth Management and Wholesale Banking - CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada with offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at www.cibc.com.