Student University debt nearly $30,000

August 2012 – As the summer draws ever closer to the end, families across the county are gearing up for back-to-school season. For many, their education plans include university.

The number of Canadians aged 25 to 39 who hold a university has been increasing. In 1986, Statistics Canada found that 14.7 percent of Canadians in this age bracket held a university degree. In 2009, 31.4 percent of Canadians reported having at least one degree.

As the number of students enrolled in higher education has increased, prices have as well. TD Canada Trust says the total average cost of pursuing a four-year undergraduate degree while living away from home at $84,000. The ability for parents to save enough to pay for their child’s studies can be challenging. As a result, students are taking on more debt – averaging $27,747 for a graduating university student – and parents are more likely to find themselves with their grown children back home due to financial reasons.

“Funding a four-year degree can be very difficult, especially for parents with more than one child,” said Shahz Beig, Associate Vice President, Personal Lending, TD Canada Trust, in a statement. “Even if parents can’t afford to pay for all of their children’s studies, they can still help them graduate with less debt by teaching them how to fund and manage their finances for post-secondary education.”

For many parents, helping their children prepare academically for their school of choice is the main focus. But the finances catch up fast. Regardless of when their children are heading off to school, Beig says putting a financial plan in place is critical. He provides advice on how to responsibly fund post-secondary education and repay debt after graduation.

“Post-secondary education can be the first major expense that younger Canadians have, and the greatest next to buying a home or saving for retirement,” Beig said. “That’s why it’s important for parents to talk to their kids well in advance of college or university about what they can realistically contribute, how much they expect their kids to contribute and what options are available if they haven’t saved enough.”

Beig shares three ways to help fund post-secondary education and avoid excessive student debt:

RESP: One of the best ways to save for post-secondary education is by taking advantage of a registered education savings plan or RESP. RESPs allow savings to grow tax-deferred, and earnings, when withdrawn for education purposes, are taxed at the student’s tax rate. Government grants are also available to increase savings.

Scholarships, Bursaries and Grants: Once you know how much you will be able to save and how much you need, the first place to look for additional funding is through scholarships, bursaries and grants. Research what’s available well in advance.

Summer/Part-Time Job: Encouraging your child to get a summer or part-time job can help build additional funds for post-secondary education, while helping students gain valuable skills and experience.

For those still facing a financial gap between what they have saved and the costs of post-secondary education, a student line of credit can help ensure students have access to money to cover tuition, books or living expenses, adds Beig.

“While graduating with debt may be unavoidable for many students, some options are better than others when it comes to financing post-secondary education,” says Beig. “A student line of credit provides a more cost-effective option than a loan or credit card as it offers a lower interest rate and more flexible repayment terms. The key is to use it responsibly to avoid drawing down funds for expenses that aren’t really necessary.”

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