Canadian parents setting themselves and their children up for later debt
MISSISSAUGA, ON, Aug. 29, 2017 /CNW/ - A majority (56%) of Canadian parents appear to be leaving money on the table when it comes to saving for their children's post-secondary education, according to a new Ipsos poll conducted on behalf of Knowledge First Financial. In total, six in ten (56%) parents have not taken advantage of various grants available within a Registered Education Savings Plan (RESP), while three in ten (31%) have not started saving at all.
Many families of older children admit they regret not saving more money for education. More than two-thirds (68%) of parents of children 14-22 say they would change how they saved for their children's education. When asked what they would have done differently, 36% of these parents would have saved more money each month while 30% would have started saving for post-secondary when their children were younger.
"Education costs are going in one direction; up. If parents can make room in their budgets today to start saving for their child's future education, it will lighten the financial load for the entire family when it's time to register the child in a post-secondary program," said Lesley-Anne Scorgie, personal finance expert and bestselling author.
Most parents of children aged 14-22 say they will rely on other sources of funding to pay for post-secondary education, setting themselves and their children up for debt. Four in ten (40%) will seek government student loans, while others will seek loans from a bank or credit union (15%), a home-equity line of credit (11%), borrow from friends or family (7%) or some other means of funding (6%). Overall, less than three in ten (27%) say they won't require additional means of financing their children's education. "No parent wants to see their child carry massive student debt after graduation. I'm a big fan of using RESPs to save in advance because the best part about this tool is the government grants available to parents," added Scorgie.
"We've heard from parents over and over again that they wished they started saving sooner or saved more each month. We wanted to conduct this survey to know more and validate what parents were sharing with us," said George Hopkinson, President & CEO, Knowledge First Financial Inc. "We were definitely surprised by the extent of the results. Contributing early and often to an RESP is the best action a parent can take to prepare for the rising cost of post-secondary education."
When Canadians do take advantage of grants, they have high expectations for the convenience of the process. Most parents say it is important that the grant application process is easy from an administration perspective (88%), while 82% of parents say it is important that they receive guidance and advice from an RESP specialist throughout the application process.
"As part of our commitment to student success, Knowledge First helps families navigate the complex RESP landscape and take advantage of all available government grants and incentives," added Hopkinson. "We offer a range of innovative products to meet the changing needs of families including the Flex First RESP, an individual plan offering flexibility on making contributions and receiving payments from their plan."
These are some of the findings of an Ipsos poll conducted between August 3 and 15, 2017, on behalf of Knowledge First Financial. For this survey, a sample of 1,919 Canadian parents from Ipsos' online panel was interviewed online. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.6 percentage points, 19 times out of 20, had all Canadian parents been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to coverage error, and measurement error.
About Knowledge First Financial
Canadian families have relied on education savings plans offered by Knowledge First Financial for more than 50 years. Today, the company manages $3.72 billion in assets on behalf of more than 250,000 customers. Since 1965, payments from the plans have reached $3.9 billion and the Knowledge First Foundation has further enhanced Education Assistance Payments to students by nearly $50 million.
Knowledge First Financial Inc. is a wholly-owned subsidiary of the Foundation and is the investment fund manager, administrator and distributor of Registered Education Savings Plans. Knowledge First Foundation is a not-for-profit Canadian corporation with no share capital. The Foundation is therefore able to reinvest excess revenues in initiatives that support student success.
SOURCE Knowledge First Financial Inc.
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