A child's education

Why I chose this topic:

My daughter is 2 years old so this topic is top of mind for me right now. I have met several clients over the years that didn't set up a plan and therefore their child had to postpone secondary education.

Personally, I would like to have a plan in place to help with my daughters future education. I can't say for sure that she will go to College/University, as in the end it's her choice and I can't predict the future. However if she does I would like to be able to help her get off to a good start.

Education costs are high already and most likely will increase more and more each year.

Experiences I have seen with some of my clients:

I had many clients come to my office looking for a loan because they wanted to help their child with their education and I had to decline them. Often the reason was because they were maxed out on debt and didn't qualify. No matter what the debt is for, you still have to qualify and if you don't then you have to find another source.

I have had other clients go to school for degrees in medicine and other professional fields and come out over $100,000 in debt. Yes, they SHOULD be able to get a job that will help pay it back, but imagine how much interest they will have to pay!

My personal experience:

When I attended College, I had to come up with my own financial sources. Instead of having some savings put aside for me, I had to borrow money for my education. At the time, in Canada, the Government had pretty lenient student loan programs, so it was easy for me to obtain loans for my education. Even though I was thankful for this, it meant I had to spend years after school paying back the loan plus the interest. At the end of the day, having a student loan was a positive experience, as it really helped me to budget during my years at school as I only had a set amount of money for the year. It also allowed me to budget after school as I had to make sure I had enough funds to pay the loan back.

After working in banking for 12 years, I would really like to help others plan for the future, so they can pay the LEAST amount of INTEREST possible.

Tips and Options:

There are several options when it comes to paying for someones education, here are just a few:

A) Borrow money, as I mentioned above. The downfall of this option is you have to pay interest and have the money to pay it back. If you child can't pay it back or just doesn't feel like paying it back, it can really harm their or your credit.

B) Have your child work to pay for their own education. This is good, as it adds to the child's work experience. However education costs are high and are only increasing, so in order to pay for their own education our children may have to work full-time hours while going to school. If this is the case, will they be able to successfully juggle both work and school?

C) Set up a saving plan when they are first born and help pay for SOME of their education. Yes it would be nice to pay for all of it, but not all of us can afford to put that much away. For example, if you were to put $100 away each month for 17 years, you could save $20,000 to help put towards your child's education. This isn't including any interest or grants you may earn. In Canada for example, if you open a Registered Education Savings Plan, the government will also contribute to your child's plan. It's worth it to find out what plans are out there, and what your options are.

D) In my opinion having a combination of all of the above is important. Borrowing money will help your child learn about the cost of borrowing and budgeting. Working will help them gain life experiences and will help their resume. Having a savings plan will help them pay less interest and have a more balanced school/work life.




JS.