The cost of university

If your child's high school graduation used to seem like a far-off event but is suddenly right around the corner, you might be thinking about the cost of the next stage of their education journey.

I've had a number in my head about how much university is going to cost my own two kids (if they choose that route), but I'd never checked the accuracy of that number. So, with the new school year in full swing, I thought it would be a good time do to a little research into the cost of university.

Adding it up

There are many variations of post-secondary education of course, but for the sake of simplicity, I’ve assumed a student attends an Ontario university and lives away from home. I looked at tuition, residence and other costs at four universities*, and calculated the average (they were all pretty comparable). I found that the cost to send a child to university for an Arts/Humanities degree is about $24,000 per year - close to $100,000 for four years. The breakdown is as follows:

This is the base cost - there are extras! Consider things like a transit pass, higher-cost programs (Engineering for example can add about $6,000 to the tuition amount), an active social life, transportation home for various holidays and so on, in addition to the costs you are incurring now like clothing, shoes, and haircuts.

You can defray these costs if your child works part-time during the school year and/or during the summer. A student who works 20 hours a week at minimum wage can earn about $10,000 over the course of a school year.

Savings plan

If your child is not at the graduation age yet, using an RESP is a smart way to save for post-secondary education. Take advantage of the government grant: you'll get a 20% match of your contribution from the Federal government to a max of $500 per child per year. If you started late, you can still get the grant from prior years by contributing more in future years.** You won't find a 20% return like that anywhere else!

Getting ready

If your child is ready to fly the coop and go off to university, figuring out the cost and how to pay for it might be on your to-do list. While they are busy with campus tours, completing applications, and acing grade 12 chemistry, you could be doing the money math, making a budget, and discussing options like having them work part-time or applying for scholarships or bursaries.

Exciting times! 

Take care of yourself (and your money),

Anita Bruinsma, CFA

Clarity Personal Finance

*University of Waterloo, Western University, McMaster University, and the University of Windsor. 

**There are rules and caveats.

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