Answer Centre

Saving for college or university

Your child has big dreams. Her future goals include everything from astronaut to teacher to doctor. You want nothing more than to make sure your child can pursue those dreams, and that means preparing for the future costs of her education. We've got a few ways to help you out with that at The Co-operators.

From 2006 to 2011, the average undergraduate tuition costs for one year rose from $4,400 to $5,138. This does not include the other costs of going to school such as rent, food, books, transportation, and monthly bills, which can add up to much more than the cost of tuition. To pay these bills, many students take out loans, which they end up paying off well into adulthood. To pay tuition alone, which could reach about $6,000 a year if tuition costs continue to increase at the same rate, you would have to save $24,000 to put your child through a four-year program.

Saving for college or university

Your child has big dreams. Her future goals include everything from astronaut to teacher to doctor. You want nothing more than to make sure your child can pursue those dreams, and that means preparing for the future costs of her education. We've got a few ways to help you out with that at The Co-operators.

How much will it cost?

From 2006 to 2011, the average undergraduate tuition costs for one year rose from $4,400 to $5,138. This does not include the other costs of going to school such as rent, food, books, transportation, and monthly bills, which can add up to much more than the cost of tuition. To pay these bills, many students take out loans, which they end up paying off well into adulthood. To pay tuition alone, which could reach about $6,000 a year if tuition costs continue to increase at the same rate, you would have to save $24,000 to put your child through a four-year program.

Start an RESP

Spare your kids those student loan bill headaches by saving for their future now. RESPs are a tax-advantaged way for you to save for your child's future, and many Canadians will qualify for some help with their RESPs from the government.

Why start an RESP with an insurance company?

Insurance companies are the only institutions that can offer segregated funds, which protect 75% of your initial RESP investment, unlike mutual funds or other investment vehicles.

Make life insurance part of the package

While you are putting away money for an RESP, give your child level life insurance premiums throughout their entire life with our Head Start program. Life insurance may not be of much use to them in their student years, but they will thank you soon after school is finished when they can take advantage of lower premium payments.

TFSAs can do the trick

If you max out your child's registered education savings plan, you can also put money away in a Tax-Free Savings Account (TFSA). If your child has a part-time job and is declaring income with the Canada Revenue Agency (CRA), they can open a TFSA and save up to $5,000 a year in it, tax free. If they do it in one of our Versatile Portfolio TFSAs, 75% of their investment is guaranteed and they will be much more likely to make money than if they simply saved the money in a TFSA bank account.

Plan together

Sit down with your teenager when you are planning for college and develop a budget with them. Ensure that they understand how much it will cost to go to school and to live day to day if they plan on leaving home for school.

If they can attend the programs they are looking for close to home, encourage them to stay at home throughout their education to save on rent and food, and relax the ground rules a bit so that they will enjoy most of the same freedoms that they would if they were to get an apartment with a roommate.

The more involved your teenager is in the process, the more they will understand the budgeting process and how they can help through saving, making the right choices and working hard.

To find out more about saving for college or university, contact your Financial Advisor.