The stellar returns from post-secondary schooling should motivate all households with children to provision for higher education, according to a new report from TD Economics.

TD allows that the cost of obtaining a post secondary education has risen rapidly over the last decade. And, the price tag is likely to continue to rise faster than the pace of inflation in the coming years, it says. “Indeed, based on relatively conservative assumptions about future price trends, the total tuition and academic fees for a four-year university degree started at the end of this decade could amount to almost $30,000.”

“While the sheer size of this investment is daunting, parents and students should take heart that the rate of return is also remarkably good,” TD says. “Numerous academic studies show that the higher future income stream resulting from the investment in a post-secondary education is equivalent to an average annual return of more than 12% after inflation and taxes. And, there are other significant benefits as well, often including better health and a higher standard of living.”

“Given these advantages, households should formulate a savings strategy to accommodate future education expenses — including making use of RRSP and RESP tax shelters,” TD offers. “The fantastic value of a post secondary education, with a real after-tax annual return of more than 12%, is simply too good to pass up.”

“The main challenge in reaping this gain is finding the necessary up-front financing, since the benefits are primarily back-loaded. A variety of government programs aid in this process. The most prominent are the Lifelong Learning Plan, which allows students to tap their RRSP accounts, and the Registered Education Savings Plan,” it concludes. “With some diligent studying, careful planning, and the effective use of government incentives, a post secondary education can be an attainable goal for most Canadians and their children.”