With students getting ready to hit the books again, there’s no better time for financial advisors to review clients’ strategies for saving for their children’s post-secondary education.

According to a recent study by Toronto-Dominion Bank, 87% of parents say they plan to pay all or part of the cost of their child’s postsecondary education. On the other hand, 26% say they have yet to start saving and another 15% have no idea how they are going to finance post-secondary education costs.

“Advisors need to have this discussion with clients as early as possible in the game,” says Steve Gobel, regional director for Winnipeg-based Investors Group Inc.in Ottawa. “One of the challenges that advisors face is that the amount of money that goes into an education savings programs isn’t anywhere near what clients put into their retirement savings, and sometimes [education savings] can be seen as a secondary financial issue. In fact, for a lot of parents, their kids’ education is near the top of the list of their financial concerns.”

Gobel cautions against underestimating how important planning for education is, especially for parents who are committed to bearing these costs. Among the parents surveyed, 10% say they are planning to use either their line of credit or credit cards for education costs. That means interest rates as high as 21% could be added to already high tuition fees.

In 2009, TD’s economics department reported the cost of a four-year undergraduate degree was more than $80,000 for students living away from home. According to the more recent TD survey, two-thirds of students expect to be in debt when they graduate, with 30% projecting they will owe at least $15,000.

“The person who is going to financially benefit the most from the education is the student themselves, and parents have to be aware of what they can financially afford,” says Gobel. “I think it’s understandable that some parents may want the child to be responsible for some of the costs.”

Responses from Canadian post-secondary students who were surveyed show that many students are active participants in paying their bills, with half of respondents working throughout the summer months to help pay for school. Although these students are saving their summer earnings, 66% of students say they will still not earn enough money to cover their expenses. That means students are still relying on student loans, registered education savings plans or financial help from parents.

If a client’s child or children are already enrolled in school, advisors can still take the opportunity to sit down with both parent and child to discuss financing tools that are specifically designed for students, says Gobel. Financial products such as student lines of credit can help students with the financial help they need, at a lower cost than most loans.

For parents who still have time to save, RESPs are the best option, says Gobel: “Ever since the government brought in the grant, it has outweighed any negatives there may be toward having an RESP.”

Along with the major tax benefits that RESPs offer clients, the government also provides the Canada education savings grant (up to $7,200) and the Canada Learning Bond. IE