Wow! Where did the summer go? The kids are back to school already.

It’s an appropriate time to remind you that university costs can be a financial stress for those who don’t have a plan. Recent estimates show that the average cost for university education (including tuition, books, meals, lodging, etc.) is close to $15,000 for the 2005 - 2006 school year. Considering a 4-year program, you’re looking at a potential $60,000 for post-secondary education. This cost is expected to increase in future years. So how will you pay?

The time to start saving is now. Looking at a monthly savings of $130 and assuming a compound rate of return of 6%, you will have $50,000 by the time your newborn is 18.

We have discussed the benefits of the Registered Education Savings Plan (RESP) in this column before, so we will not go into the details today. Using the same commitment of $130 per month and adding in the 20% government grant from the RESP, your accumulated savings is projected to be about $60,000. That’s $10,000 more financed by the government. If you wait until your child starts grade one, you will have to put away $210 per month to come close to achieving the same objective.

If you have children already in their teens, saving for education can be a bit more difficult. Although the RESP is still an option, there are other alternatives. You can set up a non-registered savings account, some of which provide tax-deferred growth, without any contribution or age limits. An informal trust will allow you to put money away that will become available to your child when he/she reaches the age of majority. These options can give you more flexibility with the investment choice and the money can be used for other purposes if you child decides not to pursue higher education.

Finally, if your child is ready to attend university in the next year or so, and no savings have been set aside, there are still ways to finance education. Your child can apply for a student loan, but make sure you and your child know the terms of the loan. Understand how the interest and rate is calculated and how the loan will be repaid. There are also grants, bursaries and scholarships to consider. For those who qualify, they can provide much needed cash, and they don’t have to be repaid! If all else fails, encourage your child to get a part-time or summer job to contribute to his/her own higher learning. This may help your child appreciate their post-secondary education all the more.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.