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education finance

Students walk between buildings on UBC campus in Vancouver, B.C., on October 29, 2013.Ben Nelms/The Globe and Mail

Long before acceptance letters arrive, students are faced with the first of many decisions: go away for school, or stay local and live at home. In fact, our 2013 Student Poll showed that nearly two-thirds (64 per cent) of postsecondary students planned to live away from home in the coming year. Students living away from home expected to take on more debt – $31,000 v. the $22,000 reported by students who intended to live at home. With rising student debt the subject of so much conversation and debate in Canada, it is interesting to see that so many students (and their parents) still plan to take on this additional expense when a viable, comparable education alternative to live and study at home may exist.

Staying local isn't an option for everyone – some may not have a local school available to them, others may be studying a specific program only available at certain colleges or universities, and still others may have only been accepted at a school away from home. For these students, living away from home is required in order to achieve the education they seek. For those of us living in larger, urban centres, where our children are within commuting distance of several universities and colleges, I find myself questioning the benefits of going away, particularly when debt is such a central issue.

For the sake of full disclosure, I should state that I went away to university (away was a 40-minute drive from home). I enjoyed the experience, made lots of friends, and was reasonably independent. Was it real life? Not for me. That happened when I really moved out on my own, worked full-time, paid rent, insurance, and all the other costs of daily life. So when I think about my own children and their education, I'm not convinced I would encourage them to go away to school for the purpose of getting out on their own and having the experience.

I voiced this opinion at a recent lunch with friends and was surprised at how polarizing this topic can be. My friend Katherine responded very quickly by stating that she wants both her children to go away to school and have the same experience she did. She feels very strongly that by living on her own she was able to experience being an adult and taking care of herself, with the knowledge that her parents were still there if she needed them.

At the end of the day, deciding whether or not to go away to school is a personal decision. Living away from home can be a trial run for full independence. Is it worth the additional expense? Sure, if it isn't going to set you back significantly and delay other goals you have in your life, beyond graduation. If, as a parent, you are willing to help finance living away, then make sure your children learn from the experience. Here are some ways to make either decision work:

1. Establish some ground rules before the start of the school year. This means identifying which expense you as a parent will be covering and which items are the responsibility of your child. Ideally, students should create a budget that covers their sources of income and all expenses, including any discretionary spending. As for calls home mid-month, try to temper the urge to bail them out each time by determining what they need the additional funds for. This is the time to learn the difference between need v. want. You don't say no every time – but be thoughtful when you say yes.

2. Teach your children to be disciplined when it comes to credit. According to the Canadian University Survey Consortium's 2012 Graduating Student Survey, almost 90 per cent of graduating students have at least one credit card. This means your child will likely be acquiring one while in school. So make sure you prepare them for this. They need to understand the importance of always paying their bill on time, paying it in full whenever possible to avoid interest and how responsible use of a credit card will protect and establish a good credit rating which they will need later on in life.

3. Make sure they know how to cook a few simple meals. Students will quickly burn through their money if they are dependent on take out and fast food. Send them off with a great cookbook on healthy, simple meals.

4. Look for other ways to save money. Students are entitled to discounts on a variety of products and services. Be sure to ask if there is a student discount available – this can help you save with bank products, movie or concert tickets, transportation and retailers.

5. If going away to school for the duration of their program is not feasible, consider an alternative. It is becoming increasingly more common for students to live away from home for the first year of school, especially if that school is within a reasonable commuting distance. By living in residence or off campus in your first year, you will get a chance to make new friends, participate in the school community and immerse yourself in your studies. You can then switch to commuting in your later years of school.

Melissa Jarman is the Director of Student Banking at RBC. She is the mother of two children ages 10 and 14, and already helping them prepare for their postsecondary days.