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August 26th, 2025
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The Financial Impact of Post-Secondary Education and Reasons to Plan Early
Nov 5, 2024
Photo courtesy of Pexels
As is the case in most other regions of the world, post-secondary education (PSE) has been a catalyst for economic and social prosperity in Canada. While it has been a necessity for a well-prepared career, it hasn't made life any easier for most family budgets because higher education is expensive and only getting more so over time.
The financial impact of PSE is quite deep, and the only way to overcome this hurdle is to plan finances early. Many interesting options are available in Canada, including a Registered Education Savings Plan (RESP).
Mitigation of Higher Education Financial Burden through Early Planning
Whether you go with an RESP or choose another funding option, it’s important to start early. Many families opt for an RESP, a tax-advantaged savings account, because it helps them save money to be used to finance their child’s future education, including colleges CEGEPs, trade schools, and even apprenticeship programs.
Once an account has been opened, the financial institution can apply for grants, such as the Canada Education Savings Grant (CESG) on behalf of an RESP account holder. The funds flow directly into the RESP account to support a child’s education or offset expensive items, such as books, tuition, rent, and transportation.
The increasingly heavy burden of PSE costs feels lighter with the support families get through RESP accounts. Things aren’t easy for families, considering that average undergraduate annual tuition has increased from $5,767 to $7,076 from 2013 to 2023. It may not look like a huge shift over a decade, but if a child is still young, the cost will definitely go up by the time they are ready for post-secondary education.
Interestingly, tuition is only one part of the story. It is found that the total cost of attendance for an on-campus full-time student is around $19,500 per year, especially when costs such as books and supplies, rent, transportation and other living expenses are added together.
These are significant costs, accentuating the importance of starting early and planning for PSE. Going with an RESP makes sense because the money put into the RESP grows tax-free until withdrawn and the Government grants are only available with an RESP.
Other Options to Explore
RESPs are usually the most favorable option for most families, but it is a good idea to consider other alternatives as well. Early financial planning may involve exploring other options such as tax savings accounts or TFSAs, as they also ensure tax-free investments, tax-free growth, and flexible withdrawal options.
In-trust accounts are another similar option. These accounts can be opened in a minor’s name and have certain tax benefits. There are also scholarships and bursaries, many of which are arranged and managed by large Fintech companies, playing their role in making PSE studies available to students.
Endnote
The financial implications of post-secondary education can be critical. Knowing everything associated with the costs in education and planning early may greatly relieve the pressures associated with higher education. RESPs are a good way to begin saving for education funding.
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