Help! I'm trying to save for an education

We will be beginning the live discussion at 1 p.m. ET, but just want to check in with Dean Owen to make sure all is well first. Readers are welcome to start submitting questions, but they won’t appear right away as they will be held in a queue.

by Christina Varga 9/27/2012 4:49:19 PM
Thank you for joining us today, Dean.

by Christina Varga 9/27/2012 4:50:10 PM
Thank you very much for having me today

by Dean 9/27/2012 4:51:35 PM
Before we begin, could you give us a sense of what are your clients’ main concerns about saving for their children’s education, or even their own continuing education?

by Christina Varga 9/27/2012 5:00:50 PM
People today are concerned that post secondary costs are going up much more than the rate of inflation. Education has nothing to do with the rate of inflation. It has everything to do with the health of provincial funding

by Dean 9/27/2012 5:02:16 PM
Could you talk more about what you mean about the health of provincial funding?

by Christina Varga 9/27/2012 5:03:05 PM
The costs of tuition are subsidized by the provincial governments. As they are squeezed financially, funding for education can be affected

by Dean 9/27/2012 5:03:38 PM
So, how does this affect parents looking to save for education, or for adults looking to fund their own continuing education? Does it require more saving? A heftier debt load? A mix of these?

by Christina Varga 9/27/2012 5:04:49 PM
It affects parents in that they have 3 choices. Save early, pay as your child goes to post-secondary, or borrow the money and pay it back. Obviously, saving today is the best way to go, particularly with the programs that the federal government has put in place

by Dean edited by Christina Varga 9/27/2012 5:06:41 PM
Dean, I've seen some alarming stats that indicate a very small percentage of Canadian families actually save for their children's education. Given this do you think the Federal Gov't will introduce new incentives beyond the CESG (20%) such as being able to deduct contributions from personal income taxes(pretax contributions), or raise the limit beyond $50K max/beneficiary?

by Saskatchewan concerned parent 9/27/2012 5:07:06 PM
We currently have provincial governments that are looking for more revenue than they are looking to give out tax incentives. So I don't think this will happen in the short term. I also don't believe that raising the limit will entice more people to save for their child's education. If it is not being used a lot, a higher limit will not encourage people to save.

by Dean edited by Christina Varga 9/27/2012 5:09:34 PM
How much do you think we need to save for our three kids (oldest is 8 years old)?

by andrea 9/27/2012 5:11:50 PM
The average tuition cost in Canada is $5740. Will your child be staying in your home town Andrea

by Dean 9/27/2012 5:13:39 PM
I think yes, but I want them to have the opportunity to go elsewhere if they want (including the US).

by andrea 9/27/2012 5:15:22 PM
How much is tuition expected to increase over the next 10 years?

by andrea 9/27/2012 5:15:23 PM
If your children are 8 and under, and they stay at home for university, considering a 10% increase in tuition every year, you will need to save $228,000 for education. If they leave home, this cost will rise by an average of $7100 per year in today's dollars per child

by Dean 9/27/2012 5:16:04 PM
I wish I could say that I was making up the 10% number, but that is the actual inflation rate of university tuition

by Dean 9/27/2012 5:17:30 PM
If this number is correct, you can expect the average tuition in Canada to be over $14,000 in 10 years.

by Dean 9/27/2012 5:18:35 PM
Hi Dean. I'm disturbed by how much education costs these days. Can you recommend any safe ways to grow my money? The markets are pretty crazy right now.

by Sam874 9/27/2012 5:19:06 PM
You don't have to go into mutual funds to save money. You can go into much lower volatility funds to save money, knowing that if you are investing in an RESP you will automatically make a 20% return, courtesy of the Education Savings Grant

by Dean 9/27/2012 5:20:41 PM