Over the last few months since the start of the 2011-2012 school year the media has reported on a variety of studies about the value and cost of a post-secondary education in this country and how those costs should be funded. Here are some of them.
A report from TD Economics said the average rate of return on the cost of getting an undergraduate degree — now estimated at about $60,000 — is above 10 per cent and the return on investment of a college diploma, which has lower up-front costs, is even higher.
If the cost of a university education is high now, it’s only going to get worse. A child born in 2011 could face total costs of $140,000 for a degree when he or she is ready to enter university.
According to Statistics Canada, about 26 per cent of students take out government-funded student loans to pay for their education and students leave post-secondary school with an average debt of about $18,000.
In another study, BMO Financial Group found that although 69 per cent of Canadians are concerned about the affordability of a post-secondary education, only 56 per cent of Canadians with young children have a Registered Education Savings Plan (RESP), and of those who do, they are contributing less than usual because they don’t have enough money.
The Canadian government created the RESP in 1998 as a way to put aside money to pay for a child’s post-secondary education.
RESPs are believed to have benefitted more than three million children and account for about a third of the estimated $18 billion that families in Canada have put away for their children’s education since the program began.
You can contribute up to $50,000 into a plan for each child named who is enrolled in qualified educational programs such as a trade school, CEGEP, college or university.
There is no annual contribution limit and the government will add a grant of up to a maximum of $7,200.
BMO’s annual student survey found that the majority of students and parents agree they should share the responsibility of education costs.
“Attending university or college is a hefty investment, so it’s essential that students and parents are on the same page with it comes to funding a post-secondary education,” says Su McVey, BMO vice-president. “Leveraging RESPs – which both parents and grandparents can contribute to – and student loans can help pay for tuition. Beyond that, parents and students need to work together to establish a comprehensive budget ahead of the school year to manage ongoing expenses.”
College and university graduates generally are more employable, earn more and spend less time unemployed if and when they lose their jobs than people who have a high school diploma or less.
However, an education is not always a guarantee of a well-paying job.
Some industries/occupations pay better than others and in some cases, particularly the arts, some people make it big while others can starve – 90 per cent of the money is made by 10 per cent of the people is a common saying about these kinds of occupations.
And of course there are numerous examples of rags to riches stories of people who have made fortunes with little or no formal, higher education, Steve Jobs, co-founder of Apple being a very recent example. He reportedly dropped out of college after a year or two.
It’s easy to get fixated about education, but the reality is that education can be a double-edged sword – it may be a good thing to have, but there’s no guarantee that it’s going to translate into a lot of money and it may actually mean that you start your working life with a pile of debt that you will have to take with you as you start down the road of your career.
Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.