Five ways to pay for college Whitehorse YT
Five ways to pay for college
(NC)-The Ministry of Training, Colleges and Universities says post-secondary schooling in Ontario can cost from $5,000 to $11,000 or more per year. Multiply that by four years and a couple of children, and it's easy to see why they call it investing in an education.
Tim J. Cestnick, FCA, CPA, CFP, TEP is managing director of The WaterStreet Group Inc. in Burlington and author of Winning the Education Savings Game, a complete guide to paying for education in Canada. He tells clients and their children that there are five ways to pay for a university education: saving, sweating, stealing, borrowing and begging.
Saving, he says, is probably the surest strategy. One of the best methods, the Registered Education Savings Plan (RESP), is actually a form of income splitting between parent and child. The income earned on funds in an RESP is still taxable, but the tax is paid by the child - at a rate determined by his or her income level - when it's withdrawn to pay for school.
If savings won't cover it, children may have to sweat their way through college. "Many try to work full-time and carry a full course load," says Peggy Wallace, CA, and PhD, who teaches at Trent University in Peterborough. "It doesn't work. Their grades suffer and they are under a lot of stress. Many students end up dropping courses."
Stealing refers to robbing yourself. Cestnick recommends you avoid digging into safety nets like the equity in your home or your retirement savings to pay for your children's education. This makes sense only as a last resort.
The Ontario Student Assistance Program or the Canada Student Loans Program will help students borrow for school, providing they meet certain financial criteria. The student must be a Canadian citizen or protected person and live in the country - in Ontario for OSAP loans. Students must carry at least a 60 per cent course load; sometimes less if they have a disability. Loans are handled by private lending institutions but essentially guaranteed by the government. Repayment starts six months after graduation, and there can be tax credits for the interest paid.
Begging means using other people's money to pay for school. "There are many grants, scholarships, bursaries and awards available at most universities," advises Wallace. "Some plans specifically consider financial need, while other scholarships, awards and endowments are based on academic standing and/or extra-curricular achievements. There's rarely enough to cover everything, but it can certainly help and it doesn't have to be repaid."
Cestnick suggests that you start to look for scholarships early, beginning with high-school guidance counsellors. "The Canada Millennium Scholarship Foundation helps about 100,000 students with an average of about $3,000 each year," he says. Other possibilities for grants and awards are employers, big corporations and institutions. For some good sources and ideas, try www.scholarshipscanada.com.
"There's no substitute for making a plan and starting early," says Cestnick.
To ease the stress on your bank account, your nerves, and those of your children, make saving for education a priority.
For more information contact a Chartered Accountant.