Postsecondary costs

It’s depressing but true: The average debt load for students graduating from a four-year postsecondary program is estimated at $26,000. With statistics like that, you definitely want to do everything you can to try to come in under the average-—and with financial planning, you can.

By following these financial planning steps, you can calculate your total costs, figure out how to pay them and put some budget controls in place so your student can come in under the average debt load.

Calculate costs
Your first step is to account for all your student’s possible costs. Some costs are obvious and fixed, such as tuition. Other costs, like accommodations, are variable, meaning they vary dramatically depending on your choices. Some costs are hidden, meaning your teen may not think of them until they occur.

Have your teen contact the college or university he or she wishes to attend, and ask for an estimate on tuition and living costs. Some colleges and universities post their fees on their Web sites.

Your student should also contact recent graduates or current students of the postsecondary schools they wish to attend to determine the average budget students there follow. If friends or family can’t provide a contact person, contact the institution’s student union for budget statistics.

It’s best to contact institutions during reading or study week because students aren’t on campus then and administrative personnel will have more time to help prospective students.

Round up your resources
Now that your family has an idea of postsecondary costs, it’s time to figure out how you’ll pay them.

RESP's and family contributions
Talk with your teen about whether or not you have money set aside for postsecondary education. For the past several years, the federal government has been giving parents $400 per year for $2,000 deposited into a Registered Education Savings Plan or RESP. There are also other types of savings plans besides RESP's (e.g. trusts). If you have put money away, ask your financial planner what it will be worth when your teen starts college or university.

Bursaries, scholarships and loans
Check out possible scholarships and bursaries. Universities, corporations and organizations offer awards for good marks and for demonstrating good citizenship.

If you have teens with a few years until college or university, encourage them to scope out scholarship requirements now so they can pursue the qualifications needed. Remember that there are also government loans available to help your family pay for postsecondary.

Close the gap
Subtract your student’s costs from resources. If you’re in the black, the good news is your teen is on the road to a debt-free education. If you’re in the red, you can close the gap by reducing variable costs and finding ways to increase your family’s resources.

Examine how you can reduce your variable costs. Can your student change accommodations, maybe by living off campus, with more roommates or at home? Can your student reduce entertainment costs or number of trips home?

See where you can increase your student's funds. Can your teen find a job (or a higher-paying job) for the summer? Are there scholarships or bursaries for which your teen can qualify?

Teach budgeting
Budgeting can help your teen reduce costs and increase resources before and during college or university.

Budgeting is tough to do. There’s a lot of pressure to buy the right things and to look the right way. But if a postsecondary education is the goal—and your teens don't want to pay for it for the rest of their lives—teach them how to budget. Give your teens these tips.
Track your spending.
Pay yourself first. Get in the habit of taking money for savings right off the top. Set aside your savings and pretend you never had it. You’ll be amazed how it adds up.

Before you buy, ask yourself the following questions:
Do I really need this?
Can I find it cheaper somewhere else?
If I wait, can I find it on sale?
Can I be creative—shop vintage, eBay, Army surplus, second-hand?

A postsecondary education can cost a lot. But with a little bit of planning, it will be the best investment your family can make.

This article is submitted by the Financial Planners Standards Council (FPSC).

For more information, visit the Learning Centre at the Financial Planners Standards Council Web site, www.cfp-ca.org.  Financial Planners Standards Council (FPSC).

SHOULD YOUR TEEN GET A JOB?
Should your teen get a job to help pay for school? The truth is there is no one answer—it depends on how organized your teen is and what he or she can handle.

But consider the benefits: Part-time and summer jobs can help teens get into some programs and figure out what they do and don’t like to do. For example, if a student is considering studying healthcare, working in a hospital may give her invaluable experience. If a teen wants to work with animals, getting a part-time job with a veterinarian will give him a feel for the job.

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