Post-secondary education is a planning test for advisors

Grant Moyle, Senior Wealth Advisor at the Moyle Rowley Wealth Management Group of Wellington-Altus in Barrie, adds that he has personally seen the cost of education rising, as he supports two children in post-secondary education. He and Rowley both try to show clients the wide array of financial levers they and their children can pull to create as much flexibility as possible in their education decisions. That includes using provincial loan programs, scholarships, bursaries, and grants to support the savings a client has for their children.

Planning for a range of educational goals

Costs can vary wildly for different educational options within Canada, but when international education is considered, the costs can skyrocket. Education in the United States can cost between $25,000 (USD) and $45,000 (USD) for public universities and between $50,000 (USD) and $80,000 (USD) for private universities. Rowley adds that while some clients are considering US or European education for their children, advisors need to ensure that the institution qualifies for Registered Education Savings Plan (RESP) withdrawals.

Just as some clients consider more expensive educational options abroad, Moyle has noted a different shift towards more affordable options with clearer career paths. Trade schools, he says, are becoming more popular among parents and students today as they look at potential long-term careers and see AI as a potential disruptor for traditional university education based career paths. Those trade schools come with the advantage of being more widely dispersed, making it more likely that a clients’ children can live at home while they attend trade school, further saving on costs.

Weighing out these decisions can be challenging for clients as they have to consider cost, their children’s desires, their own expectations around career paths. Rowley and Moyle try to work with clients to rationalize the decision, outlining choices in terms of costs and benefits. They say that most clients will also set reasonable parameters around what their children want to study and the children’s responsibility in helping to cover the costs of that education.  

Structural gaps in education planning

Rowley notes with some alarm that only 43 per cent of Canadian parents and caregivers have an RESP for their children, according to the Canadian Financial Capability Survey. RESPs, he explains, form the core of the savings approach that he and Moyle use for their clients. The tax advantages that come from the registered account can be extremely powerful for clients, but Rowley argues that these accounts’ relatively small size and high complexity make them a low priority for larger financial institutions.