Keep Calm and Save On

Child Learning to Ride Bike

The latest numbers coming from Statistics Canada on tuition fees may look scary but if you’re among the half of Canadian parents investing in an RESP some sage advice for you: Keep Calm and Save On!

Statistics Canada says Canadian full-time students in undergraduate programs paid 3.3% more on average in tuition fees for the 2013/2014 year this fall than they did a year earlier. On average, undergraduate students paid $5,772 in tuition fees this year compared with $5,586 last year.

We’ve taken a good look at the data and here’s what we’ve noticed: Parents paying into an RESP for their child shouldn’t worry.

Here’s why:

  1. If history serves itself correct, the number released by Statistics Canada should not come as a surprise. The average rate of fee increase has remained steady at roughly 4 per cent over the last 5 years. Which means parents can predict the increase quite easily with some simple math making it easier to anticipate how much tuition will cost for their little bundle of joy to attend post-secondary education.
  2. Inflation; if you take into account an average rate of inflation of about 2 per cent (CPI Canada); the actual rate of fee increase stands realistically at 2 per cent after inflation. This year’s data shows a 3.3% increase in tuition fees for full-time studies in an undergraduate program and inflation at 1.3%, so we’re looking at an increase of 2 per cent over inflation.
  3. Your RESP is doing the work for you and here’s the hard data to prove it: in 2012 the average CST RESP subscribers collected just over $8,000 in principal when their RESP plan matured while beneficiaries collected roughly $2,400 in Educational Assistance Payments. To further add credibility to our own statistics according to Employment and Social Development Canada, the average student withdrawal from an RESP was close to $10,000 in 2012. So if you do the math, that’s enough to pay for the tuition fees listed in the latest Statistics Canada data.
  4. Tax credits are there; use them. From tuition, to books there are lots of credits available to students from the federal and provincial governments that can be passed along to parents. These could be worth $2,200 to the average Canadian student and applied to a child’s subsequent year of schooling if you plan ahead.

So as you can see, with a little foresight and planning with a RESP, the numbers we’re seeing aren’t as scary as their being made out to be. Keep Calm and Save On!

Keep Calm and Save On | CST Blog | C.S.T. Consultants Inc.


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