With school now back in session, BMO Investments Inc. Tuesday announced the results of a study that examines Canadians’ awareness around saving for their children’s post-secondary education.
The study found that while only 52% of Canadian parents have opened a Registered Education Savings Plan (RESP) for their children, 70% believe it is best to set up an RESP as soon as possible after a child is born.
BMO notes that a four-year university degree can cost upwards of $60,000 (including tuition, books and board). For a child born in 2012, the costs of a four-year university degree could reach $140,000.
“The costs associated with a post-secondary education can be daunting, so it’s encouraging to see that a majority of Canadian parents appreciate the importance of planning and saving for post-secondary education,” says Robert Armstrong, vice president, managed solutions and registered plans strategy, BMO Investments Inc.
The study revealed that there are still many parents who are not taking advantage of RESPs, with the biggest barriers to adoption being a lack of money and awareness. According to the study:
- sixty per cent of Canadian parents believe they cannot afford to contribute to an RESP; and
- an overwhelming majority (93%) of Canadian parents are not aware of the range of investments they can hold within an RESP.
“A good RESP savings strategy, for those who are unsure about what to hold in an RESP, is to include investments that have a designated target maturity date,” says Armstrong.
Armstrong adds that parents who are finding it hard to come up with the money to contribute to an RESP have options, including making regular, small payments and encouraging relatives and friends to make contributions as part of a child’s birthday/holiday gifts.