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BMO Financial Group

September 23, 2010 09:15 ET

REPEAT-BMO Survey: Majority of Canadians Believe The Cost Of A Post-Secondary Education Is More Than They Can Afford

Only Half of Canadian Parents With Children Under 18 have Contributed to a Registered Education Savings Plan (RESP)

TORONTO, ONTARIO--(Marketwire - Sept. 23, 2010) - With school now in session, BMO Financial Group today announced the results of a national survey revealing that almost two-thirds of Canadians (64 per cent) believe the cost of a post-secondary education is too expensive. With a four-year program at a Canadian university currently costing up to $60,000, only 21 per cent of parents with children under the age of 18 feel confident they would be able to pay-off such costs.

The survey, conducted for BMO Financial Group by Leger Marketing, also examines the confidence level of students in relation to education costs. Three-fifths of students aged 18 to 24 share similar concerns as their parents, with 28 per cent believing they will struggle to pay off post-secondary costs and 32 per cent expecting to be in debt for years to come.

"With the total cost of education increasing every year, the most reliable way to maximize savings for a child's education is through RESPs," says David Sharone, Manager, Registered Products, BMO Financial Group. "RESPs offer the benefits of a tax-sheltered investment, and coupled with the federal government's Canada Education Savings Grant (CESG), allow parents to keep on top of rising costs and gives them peace of mind in knowing that they can provide for their child's education."

Other Key Findings:

  • Only 52 per cent of Canadian parents with children under 18 have contributed to an RESP.

  • Of those parents who are not investing in an RESP, 50 per cent do not contribute because they say they cannot afford it. A further 16 per cent say they are either unfamiliar with RESPs or do not have time to set one up.

  • When it comes to saving for post-secondary education, one quarter (24 per cent) of Canadian parents with children under 18 are relying on a savings account.

"Getting an early start on smart saving and making regular contributions are key to ensuring parents and students are prepared for the expenses associated with post-secondary education," says Mr. Sharone. "For example, if you make regular contributions of $150 per month over 18 years, your total investment, including contributions, CESG and earnings, could equal approximately $76,000. However, even if you start investing when your child starts high school, your total investment could total up to $15,000 by the time your child heads out to frosh week. It's never too late."

While investment vehicles like RESPs are an essential component of planning for post-secondary education, students and their parents should also work together to establish responsible saving, spending and borrowing practices. To help, BMO developed the SmartSteps for Students program designed to help students identify ways to minimize banking fees to lower monthly expenses, take advantage of valuable student discount programs and develop realistic budgets that outline how much they need and how much they can actually spend. BMO SmartSteps for Students is available at www.bmo.com/student.

Interested in starting or contributing to an RESP? Here are some tips to get you started:

  • Start early and make regular contributions – Even if your child's education will not begin for many years to come, it is beneficial to start making regular contributions as early as you can.
  • Speak with a financial professional – RESPs can hold several different types of investments. Speak with a financial professional to determine the investment options that best suit your needs.
  • Forego the daily splurge – Small expenses, like a fancy coffee or expensive lunch, can really add up. Aim to put the money saved towards your regular contributions.
  • Inspire alternative gift-giving – RESP contributions make great gifts for special occasions. Let friends and relatives know that you are receptive to receiving contributions for your children. RESP accounts can be opened by anyone, and a child can have multiple accounts.

The survey was completed with 1,528 Canadian adults and was conducted using Leger Marketing's Web panel between September 7 to 9, 2010. 

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