So you’ve got a little ankle-biter at home you’d like to see in a graduation gown one day? Take a deep breath: While Statistics Canada pegged the average 2015 tuition fee at $6,191, and previous studies found that graduates expect it’ll take 7.4 years to pay off their loans, the projected tuition cost in 2035 is a jaw-dropping $17,200 per year, according to the Canada Student Loans Program. That doesn’t even include the cost of books, lodging or the occasional Martian craft beer. One recent estimate put the total cost of a four-year degree in 2035 at more than $102,000. Here’s how to build a financial flotation device to keep your head above the rising cost of education.
Get a leg-up from the government
There’s no doubt about it: The Registered Education Savings Plan (RESP) is a sledgehammer against future student debt. Certified Financial Planner Jason Heath points out that the Canada Education Savings Grant will add a whopping 20 cents on every dollar that you contribute to your RESP, up to $500 per year. Also, if your family income is below $45,282, you’ll get an additional 20% on top of that. But don’t stop milking the national cash cow there: Students may also qualify for a Canada Student Grant, which provides up to $150 per month of study for middle-income families, and $375 per month of study for low-income families.
More risk, more reward
“Today’s low interest rates can be punishing to long-term savers,” says Heath, and you’ll probably have to take on risk. A loss in education savings due to suffering stocks is a scary prospect, but it may only be a temporary one: As Heath points out, there haven’t been many five-year periods where stocks haven’t gone up.
There’s no such thing as a free lunch
“Accept the fact that you may not be able to give them a full ride,” says Heath. Gone may be the days where parents can foot the entire bill. Students who want to chip in should look out for “work-study” programs, government-subsidized campus jobs that work around school schedules. Shannon Lee Simmons, who specializes in financial advice for young adults, suggests students focus on the basics: Keep your fixed costs low, prioritize debt payments from high to low interest and, of course, bring in some money.