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Pay now or pay later?

How will you pay for a post-secondary education?

A report earlier this year estimated that one year of post-secondary education in Canada costs approximately $19,500 – including tuition, accommodation, transportation, food and other expenses.

Assuming a 3% rate of inflation, that equates to $33,1972 in 2036 (18 years from now).


How will you pay?

Here are your options – how much you pay is up to you


Option # 1: Pay Now

  • Invest a lump sum of $48,655 today

  • Growing at a hypothetical average annual rate of return of 6% = $138,877 in 18 years.


Option #2: Pay monthly

  • Invest $325/month in a Registered Education Savings Plan (RESP)

  • Contributions made to an RESP grow tax free until the funds are withdrawn to pay when the beneficiary is registered at a designated educational institution.

  • RESP savings can be supplemented with government education savings initiatives, including the Canada Education Savings Grant (CESG)

  • $325/month qualifies for a $500/year CESG

Total invested:

  • $45,000 lifetime RESP contribution

  • $25,200 in additional savings

  • $7,200 lifetime CESG maximum per beneficiary

Option #3: Pay As You Go

  • Pay at the beginning of each school year


Option #4: Pay After 

  • Their post-secondary education is financed through student loans that are interest-free while they’re in school.

  • After graduating, however, those loans must be repaid. You generally have 10 years to repay your student loans. Here’s one scenario:

  • Loan of the full amount: $138,884

  • Interest rate: 6.2% (prime of 3.7% +2.5%)

  • Monthly payments: $1,555.88

  • Total interest paid: $47,821.60

  • Total amount paid: $186,705.60



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CLEMENT CHUNG, CFP, CLU

Certified Financial Planner

Fee-Based Financial Planning
Burnaby & Metro Vancouver

©2018 by Clement Chung.