BMO Bank of Montreal

BMO Bank of Montreal

September 20, 2011 06:00 ET

BMO Annual Student Survey: Cost of Post-Secondary Education a Family Affair

Majority of students and parents agree they should share responsibility of education costs, but with strings attached - One in three parents expect repayment from their child for post-secondary education in 2-5 years

- Most parents (51 per cent) are willing to go into debt to fund their children's post-secondary education

- Parents paying for their child's education expect control and visibility over their children's post-secondary affairs; nearly one-third of students disagree

TORONTO, ONTARIO--(Marketwire - Sept. 20, 2011) - The majority of Canadian university and college students (54 per cent) and their parents (65 per cent) agree that the cost of a post-secondary education, which is currently upwards of $50,000, should be split between parents and kids.

As another school year gets underway, a BMO survey on education costs released today shows half of parents (54 per cent) think they should pay 25-50 per cent of their child's post-secondary education, with 43 per cent of students in agreement. One in three students (31 per cent) say it is their own responsibility to foot the entire education bill.

The survey, conducted by Leger Marketing, surveyed both post-secondary students and their parents to determine how the education bill should be shared and managed, also found:

  • One-third of parents expect to be repaid for costs associated with their child's education within 2-5 years, while 25 per cent say 5-7 years.
  • Fifty-one per cent of parents are prepared to go into debt to fund their child's education; 40 per cent are not.
  • Only one-third of parents and students (36 per cent) say they have worked out a budget before school starts, while 68 per cent of parents say they have left the responsibility of money management to their child.

"Attending university or college is a hefty investment, so it's essential that students and parents are on the same page when it comes to funding a post-secondary education," said Su McVey, Vice President, BMO Bank of Montreal. "Leveraging Registered Education Savings Plans – which both parents and grandparents can contribute to – and student loans can help pay for tuition. Beyond that, parents and students need to work together to establish a comprehensive budget ahead of the school year to manage ongoing expenses."

Ms. McVey added that part of this process is eliminating non-essential expenses, which for students includes bank fees. She points to BMO SmartSteps for Students, a program designed to provide useful ideas to help students stay on top of their money, as well as other online tools such as BMO MoneyLogic. BMO also offers free banking to students, and is the only bank to extend this offer to recent graduates with an extra year of free banking. Students and parents might also want to consider a BMO Student Line of Credit, as they are only charged interest on what they actually borrow, and can borrow as little or as much as they need. Students can also make interest-only payments while still in school and up to one year after graduation, giving new graduates some flexibility as they make the transition into the work force.

"Strings" Attached

While the beginning of the school year can mean partial freedom from parental oversight for many students, the report also showed that parents feel their contribution to their child's education warrants control and visibility over some of their affairs, while nearly one-in-three (30 per cent) of students disagree. The 'strings attached' include:

  • Monthly budgeting, including entertainment and everyday expenses (44 per cent).
  • Where they live, including location and price (42 per cent) and who they live with (22 per cent).
  • Control over and visibility into their child's financial statements and accounts (25 per cent), and what courses and/or programs they choose - perhaps even their major (12 per cent).

According to parenting expert and best-selling author Alyson Schafer, post-secondary education represents the first time many young people are tasked with the responsibility of managing their own life, including their finances, and it's up to students and their parents to have a clear, straightforward discussion to establish responsibilities and expectations.

"It doesn't have to be a tough negotiation process. Simply drawing up a budget and understanding where expectations lie and dividing responsibilities among specific categories can eliminate many of the pitfalls and conflicts that can arise when a parent simply hands over responsibility, along with large sums of cash, for the academic year," said Ms. Schafer.

She added that the transferring of responsibility is key, reminding parents that these are lessons acquired over a long period of time and starting early is essential to the development of their children's financial management skills.

The BMO Annual Student Survey was completed with a sample of 601 post- secondary students and parents of students. A probability sample of the same size would yield a margin of error of ±5.7 per cent, 19 times out of 20.

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