Student Money: How to pay for school and have a life—a guide for students and parents

The MoneySense Student Money Guide begins with the early years: How to help children understand the value of money; how to set them up with their first bank accounts; and how to make use of RESPs. Find these topics and more in the sections for parents and guardians. 

Then, for kids who are grown and ready for college, university or trade school, we cover applying for student loans, scholarships and bursaries; covering tuition costs; handling housing expenses; withdrawing from an RESP, and more. 

How to plan to pay for school at any age

What do you need help with today? Click on one of the topics below to jump to the corresponding section in this guide:

How to save money for an education, parents edition

The best ways to help kids financially

Whether your kids are fast approaching post-secondary school or they’re just graduating from kindergarten, they’ll be better prepped for school as soon as you create a savings plan. 

You have a few different options to help support your children financially while they’re attending post-secondary school. The most common savings tool for children’s education is an RESP. This is a tax-deferred savings plan used to fund costs like tuition, books, transportation and other expenses for trade school, college or university.

You can also contribute to a tax-free savings account (TFSA) for a child or grandchild. TFSA withdrawals can be made anytime and used for education, a home down payment or other purposes. If you’ve already maxed out your child’s RESP, you can use a TFSA to save more. Not only does the money inside a TFSA grow tax-free, but there’s no tax when you withdraw. However, there are annual contribution limits.  

How to set up kids, teenagers and young adults for success with money

Preparation and practice are the keys to mastering any skill—including money management. Here we break down, based on age, what to teach the kids in your life (it does take a village, after all).

• Age 0 to 6: At this age, your kids have probably started to take note of your spending habits, so take them through your weekly shopping routines; even if you’ve switched to getting your groceries online, talking through your decisions about what to buy and what constitutes a good price sets a positive example. Giving kids an allowance and letting them make money mistakes (and good decisions!) will help them to grasp the fundamentals. Activities like playing “store” can help children learn the money basics, too. Read on for more information on helping small children learn about money.
• Age 7 to 12: This is such a great age for kids. They have some independence, but they’re still appreciative of your support (and not just because you own the Bank of Mom & Dad). So an allowance is a good idea, but so is talking about your own spending habits—even if it’s at a drive-thru, explaining what you’re willing to pay for fast food, for example. Kids should be able to learn and understand budgeting and the reasons behind spending money. In turn, they will learn about saving, too. It’s also a good time to help them open a bank account and start setting small goals. Read more on spending and saving for adolescent kids.
• Age 13 to 17: As teenagers start earning an income from part-time jobs, they learn about their wage versus their “take-home” pay. It’s also a good time to teach them about the value of saving up for a short-term goal, like a school trip or a car, or a long-term goal like contributing to their post-secondary education fund. Important decisions, like whether they should have a credit card or clothing allowance, can pop up around this time, too. Here’s more on how to educate teens about money.
• Age 18 and older: At this point, your kids are preparing to enter the real world. Hopefully, they have a good grasp of the value of money and the know-how to responsibly manage a savings account. Now’s the time to talk to them about using credit, budgeting, education costs, student debt and more.

How to get kids into the habit of saving

Knowing the value of a dollar helps set kids up for a better relationship with money. Getting them started with their own bank account helps foster that knowledge. Look for a kids’ bank account with low or no fees, since the last thing you want is for fees to eat up their smaller contributions. If you can find an account that pays interest, even better. Plus, opening an account will help them learn about banking and form good habits long before they head off to university.

Strategies for teaching kids about money

A piggy bank used to be the go-to way to teach children the value of saving and the costs of spending. But since fiat currency is becoming an increasingly digital endeavour, teaching methods should adjust to that. We outline six simple strategies for teaching kids about money, including spending, saving, budgeting and earning. The article also offers ideas for families who don’t want to use allowances to encourage kids to do household chores—every member should help out! 

Everything to know about RESPs and how to use them

An RESP is an investment account geared towards saving for a child’s education. It allows investments inside the account to grow and earn money tax-sheltered, meaning that capital gains, interest and dividend payments won’t be taxed until the funds are withdrawn (and when they are, they’ll be taxed in the hands of the child). A major benefit of this account: The government encourages you to save by kicking in a grant of up to $7,200 over the life of the plan—and potentially more if your family has a low income. 

Parents know that no two kids are the same. One kid may be headed off to culinary school while another pursues academia and another goes to an arts college. Different educational paths come with different costs and challenges. Read the advice from a financial planner on how to pay for different types of schooling.

How to save money for an education, students edition

Withdrawing from RESPs

When it’s time to cover the costs of post-secondary tuition, housing and books, you’ll want to know the steps involved in withdrawing from your family RESP. Regardless of who made the contributions—a parent, grandparent, other family member or family friend—the withdrawals are usually taxed based on the student’s income (their marginal tax rate). Typically, a student’s income is so low they will pay little to no tax. That’s the top-level strategy, but there are other planner-approved tips to help you maximize your RESP savings and returns. (More on that below.)

Financial aid for college and university in Canada

There are many paths to funding your education, aside from your own savings and your parents’ contributions. Look for bursaries, scholarships, grants and provincial loans that may be available to you. Check with your financial aid office. 

If you need to fund your post-secondary education but don’t have enough savings, you can use student loans to fully or partially cover costs, depending on your approved amount. Provincial government loans, such as the Ontario Student Assistance Program (OSAP), work in conjunction with federal loan and grant programs to help you pursue the education you want, with a relatively low interest rate. In addition, the federal government eliminated interest for Canada Student Loans and Canada Apprentice Loans under the Canada Student Financial Assistance Program on April 1, 2023. Here is how to apply for loans and grants for Canadian students.

How to save money during school

Even if you have scholarships, other funding or a steady paycheque from part-time work, you may still have a tight budget throughout the academic year. Several strategies can help you save money and take advantage of your student status, including making the most of student discounts and finding cheaper travel and textbook options. Read about money-saving strategies.

The best credit cards for students

If you’re looking to build your credit score while earning school credits (#dadjokes), there’s a selection of no-fee cards with useful perks, like earning cash back on groceries or free tickets at the movies, that can help make student life more fun. We’ve rounded up the best student credit cards in Canada right now.

The best bank accounts for students

When budgets are tight, the last thing you want is to be hit with a $20 monthly fee (that’s two burrito dinners!). These low- and no-fee accounts are perfect for students, as they offer useful features, like unlimited transactions, and points on essential purchases like gas. Some even include sign-up promotions that offer cold, hard cash. Read our complete list of the best bank accounts in Canada—and the must-know features of each.

Managing your finances: Paying for tuition? Is having a car worth the cost for students? Can you afford to move out on your own?

Paying—and saving—for tuition

School isn’t cheap. Paying your tuition is the first financial goal, and to do that you will need to have a handle on all your finances. Learn how to save money while still in school, and even earn some extra cash. 

Living on your own without adding more debt

If you’re looking to move out or gain some space, consider these things first: Can you afford to live on your own? Find out how to plan for the expected (and unexpected) expenses with this column on the real costs of moving out. 

Finally, when to pay off your student loans

If you can’t afford to pay your student loans right away (it happens!), we’ve outlined other approaches on what to do next—while keeping interest payments low and your credit score intact.

How to pay off your student loans

Whether you’ve taken out a Canada Student Loan, a provincial or territorial student loan, a bank loan and/or a line of credit to fund your education, you’ll need to repay that once you’ve finished school. Considering that interest usually starts accumulating once you’ve ended your studies, paying off your loans should be a top priority. We crunched the numbers to figure out the best strategies to pay your tuition and pay off your student loans with the least amount of interest. 

Invest when you’re young… but before loans are paid off?

You may find, especially when you first start working, everyone wants your business, including robo-advisors (we see you, targeted TikTok ads). Should you use your extra cash flow to invest or to pay off your student loans? Great question, but before you use social media to find out, consider the smart insight in this article from Certified Financial Planner Jason Heath: Should you pay off student debt before investing?

What do you do with your RESP balance after school?

Some lucky students may have leftover money in their RESP. You can leave it there for a while if you think you might pursue additional studies, or if it’s a family RESP and your siblings haven’t finished school. But if you’re planning to close the account read: What to do when you have insufficient or unused RESP funds. 

About Lisa Hannam

Lisa Hannam is the editor-in-chief at MoneySense.ca. She is an award-winning editor with over 20 years of experience in service journalism.

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