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tim cestnick

As I was searching the news archives this week for articles dealing with the education of our children, I found some interesting headlines. "Kids Make Nutritious Snacks," "Teacher Strikes Idle Kids," and "Local High School Dropouts Cut in Half," are just a few I found by way of The Star Tribune in Minneapolis, which went through the trouble of collecting such classics back in March, 2000.

Then I stumbled across the results of a survey sponsored by Fidelity Investments in the U.S. as published in the Investment Weekly News in June of this year. It's a survey on the costs of education, and while it's a U.S.-based survey, some of the findings are sure to be equally applicable in Canada.

Joe Ciccariello, a spokesman for Fidelity, had this to say: "When we looked at [high school]seniors who had a dedicated college savings account, we found they were less concerned with paying for college and saving for education expenses and more focused on being admitted to the best schools and achieving good grades in college," Mr. Ciccariello said. "One simple thing that all parents can do to help alleviate the stress surrounding college costs is to actively engage their kids in discussions around paying for college and work together to come up with a viable financial plan."

THE PLAN

Last week I spoke about creating a plan to pay for post-secondary education, and mentioned that there are five ways to pay for that education: Begging (obtaining "free money" in the form of scholarships, etc.), borrowing, stealing (from your other resources), sweating (having your child work during school) and saving. The table here is an effective tool you can use to design how your child's post-secondary education is going to be funded. Keep in mind, your child's education will likely be paid for through two or more of these methods. Design your plan as early as possible - but better late than never.

Coming up with a plan to fund your child's education will help to reduce any stress that you - and your child - might be feeling about the costs of education.

THE COSTS

By the way, the expected costs of education for each year will vary depending on the school, program, and whether your child lives away from home. The figures in the table are sample numbers only, but you should estimate the following costs to arrive at a total cost estimate for each year of school: tuition ($6,500; figures in my example), books and supplies ($1,500), accommodation ($5,000), food ($2,000), entertainment ($1,500), transportation ($2,000), and personal care ($1,500).

THE STRATEGIES

Once you've got a plan in place, you can set about determining how much you might need to save annually to have sufficient resources in the "savings" component of the plan when your child goes to school, and then determine the best way to save for that education, which will very likely start with a Registered Education Savings Plan (RESP).

Special to The Globe and Mail

Education funding plan: An example

Expected education costs

Year 1

Year 2

Year 3

Year 4

Total

Percentage

Beg

$500

$500

$500

$500

$2,000

2.3%

Borrow

5,000

5,000

5,000

5,000

20,000

23.3%

Steal

3,000

4,000

5,000

6,000

18,000

20.9%

Sweat

6,000

6,200

6,300

6,500

25,000

29.1%

Save

5,500

5,300

5,200

5,000

21,000

24.4%

Total

20,000

21,000

22,000

23,000

86,000

100.0%

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