Paying for university for your kids

Paying for university for your kids

We put two kids through school, through masters programs. Ultimately, it was not a real burden on us – it certainly wasn’t ‘expensive’ as you might be lead to believe. But, we definitely made some specific choices to achieve this result. Here’s what we did.

Savings before university

Both kids had to get summer jobs in high school. We’re pretty committed that we didn’t want them working while in school, but for the summer? Get to work for sure. We then drew up a budget for their summer income, an amount for spending for themselves, and an amount they had to save towards school. Our splitting amongst those things was somewhat arbitrary, we mostly wanted them to contribute something towards their university education rather than just counting on their parents.

Secondly, we contributed to an RESP (check my next article on RESP’s). This helped a lot. First off, saving a bit each month is a lot easier than coming up with all the money each year when they start school. Plus, the government grants that come with RESP’s really helped top things off. Between RESP’s and their savings, they had enough to get well started into their education.

During University

There’s two primary expenses when they go to university – tuition/books/school related costs, and living expenses. Our key was to minimize the second one.

Their RESP and savings handily paid their early tuition costs and gave them a monthly living allowance.

We also gave them the choice – they could live at home and attend a local university. Or they could go elsewhere and we’d help with living expenses. But, if they lived at home we’d get them into a beater car to drive back and forth to school. If they lived away, they got a bus pass lol.

Both kids chose to live at home during their undergrad. With tuition and books and a small allowance coming out of the savings, our costs were actually lowered when they went to school. Our ongoing costs; food, phones, etc, didn’t change, but we no longer had RESP contributions.

So their living expenses didn’t cost us any more than they were already. School related costs weren’t unbearable (because, Canada!), and were paid for by savings.

There was still a bit of a shortfall over the 4 years, but once again we expected them to work for their four months of summer. And once again, they were put on a budget, so much for living expenses, so much saved for their next year’s costs.

I think they may have also received a small amount of grants, I don’t recall for sure. If they did, it was minimal, and we didn’t have them take loans.

The end result? Both kids made it through their undergrad without any debt.

Post graduate expenses and savings

Both kids finished their undergrads/bachelors basically running on empty. Both wanted to get a masters degree (and both did get a masters degree). But, one took an out of country course based masters and the other did a research masters.

Masters, Child 1

Our oldest wanted to get into a specific area of science. Their chosen program only had about 4 (!) openings in Canada but there were a few larger programs in the U.S. So they ended up going to New York City for their masters. Because it was course based (i.e. they just attend classes), it was all fee based – we paid to go to school. And because it was an American program, costs were pretty damn excessive. Like $30k in tuition a year, plus living expenses.

In their case, we cosigned for a student line of credit. They then used the line of credit to fund their tuition and living expenses. Two years later, they had a degree, a great paying job, and are slowly paying off the loan. It was well worth it as they did land a six figure job, so they can afford to pay back the loan. Aside, if your children are going into a variety of masters programs, have a look at student lines of credit at the bank.

Because we cosigned for the loan, I didn’t want to be saddled with a six figure loan myself if they couldn’t complete their education. So we also made sure child 1 had life and critical illness insurance so in the worst case we had funds to pay off the debt. We couldn’t get long term disability insurance on them because they weren’t earning an income.

Masters Child 2

The second one did a research based masters. They were working in a lab, doing….I dunno, researchy type stuff I guess. They also continued to live at home, so that kept expenses low.

So with a research based masters, they did have to pay some tuition. But there’s no textbooks or any other real expenses. Plus, they get paid a nominal amount for doing the research. It’s poverty level, but hey, they’re students. So for this one, their funding from the research payed most of their expenses. In addition, they also worked each summer and again, we had them save from that income.

Child 2 graduated their masters with no debt.

Post Graduation

Child 1 got a six figure job almost right away and has carried on with their life. They’re paying off their student line of credit from their masters, but it’s quite manageable.

Child 2 is suffering from failure to launch. They moved into a PhD program while still living at home, but hated it so they quit school at that point. They now have a technical/stem masters, and have decided they don’t like the field they studied for. They’re still at home and have no debt. They’re working part time as a waiter and working substitute teaching whenever they can. That gives them a bit of income, but is hardly a career. So they’ve recently decided to go back to school and become a firefighter. OK, I guess, they’re too old for me to tell them much. But that’s another year of schooling that they’ll be starting in the fall. They’ll be funding that on their own through their savings (though we will help as necessary, we don’t want them stressed while in school). And firefighting is a decent paying job so hopefully that wraps up their career aspirations about a year and a half from now.

Summary of all this? For many Canadians, putting your kids through university is achievable. Get started on an RESP now! Make the kids work through the summers and contribute to their savings. Have them live at home so you’re not paying for two households, two utilities, two internet services, etc. And if necessary, have them take out some student loans that they can pay off post-graduation. Do all of that and you should find that it’s actually affordable, and your lifestyle won’t have to change.