Were you financially prepared for university?

Kiran Rai never questioned what she’d do after high school. The Vancouver resident headed straight to university. She admits that it wasn’t until a few semesters in that the financial implications of her new-found reality really began to hit home.

“I was so not prepared for my tuition fees when I started my degree,” says Rai, 24, who graduated this past spring from Simon Fraser University with a Bachelor of Arts in human geography. “I really hadn’t put much thought into the costs.”

Rai had a part-time job throughout university, and she says she was fortunate that her parents had some money set aside for her education. But she sensed that her mom and dad, with four children to support and put through school, were starting to feel the pinch.

“After two years I could tell it was a burden on my parents to pay every semester,” Rai says. “They were always very supportive of my studies, but I felt guilty asking, especially since I was working.”

RESP envy on campus

Post-secondary studies can be stressful enough on their own, never mind having to come up with the cash to cover tuition, textbooks and living expenses. Although Rai considers herself lucky to have had some financial backing from her family, she’s part of a majority of Canadian university students who would have loved to have had a full Registered Education Savings Plan (RESP) waiting for them.

According to a new study by BMO Financial Group, only one-third of Canadians currently enrolled in a post-secondary program has a RESP. Eighty-four per cent of students without an RESP said they wished they had one. And three-quarters of students with an RESP said that they wouldn’t have been able to afford university or college without one.

No wonder: BMO states that four-year degrees can cost more than $60,000, a number that could climb as high as $140,000 for a child born in 2013.

One of the draws of RESPs is the federal government’s matching program. The first $2,500 in RESP contributions per year get a matching 20 per cent from the Canada Education Savings Grant, which can total up to $500 annually depending on family income.

Ninety-one per cent of those without an RESP who were surveyed by BMO said they will set up an RESP for their own children.

An alternative to having funds ready and waiting, of course, is relying on student loans. The average Canadian student leaves university with about $27,000 in debt, according to the Canadian Federation of Students. It also takes the average student about 10 years to pay it off.

That’s a situation that Rai managed to avoid. Besides working part-time — taking a less-than-full course load to make time for her job — she worked during the summers instead of travelling. She also enrolled in a cooperative education program, through which she gained paid work experience throughout university. Rai is now working full-time in marketing for one of the workplaces she started out at as a co-op student.

“I remember my parents saying, ‘Whatever you do, make sure you don’t have any student loans when you graduate.’ So that’s what I did,” Rai says. “I knew I didn’t want to start off with a slew of debt that I’d have no idea how to pay off. It would stress me out so much. Even getting a Visa bill at the end of the month stresses me out.

“You can take a few classes and pay as you go,” she adds. “When I graduated in April, making that last tuition payment felt almost as good as handing in the last assignment. It felt awesome.”