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The Cost of University

Updated: Oct 5, 2022

It’s that time of year when grade 12 students are looking ahead to what’s next. If your child’s high school graduation once seemed like a distant event to you but suddenly it’s around the corner, the cost of their university education might be starting to sink in.

My older son is in grade 10 and lately I too have been wondering just how much a university education for my two sons would cost. I’ve had a number in my head but it is not based on much fact-checking. So, I did a little research to find out.

Adding It Up

There are many variations of post-secondary education of course, but for the sake of simplicity, I’ve assumed a student attends an Ontario university and lives in residence. I looked at four universities: University of Waterloo, Western University, McMaster University, and the University of Windsor. I found that the average cost to send a child to university for an Arts/Humanities degree is about $24,000 per year.

Here is how it breaks down:

· Tuition: $6,700

· Residence (double room): $7,300

· Meal plan: $5,600

· Ancillary student fees: $1,000

· Books: $1,000

· Other costs: $2,700

Most of these costs are listed on the university websites. Some even have a budgeting tool for you to find out how much your child’s year will cost.

On and Off-Campus Living

What about living off-campus? It could be a little cheaper although it will not likely make a huge difference. I did an analysis of a student living off-campus in a house shared with other students and compared the cost to living in residence. Overall, it could cost roughly $2,700 less per year.

The savings on rent could be modest. The monthly fee for living in residence on campus is $917, which includes utilities and internet. Finding a room in a shared house could cost less. I looked at some student housing ads listed on kijiji in London, Windsor, Waterloo and Hamilton. Renting a room in a shared house is roughly $700 a month (but varies greatly). Add $30/month for internet (shared among 4 students) for a total monthly cost of $730.

Looking at food costs, the savings would likely be minimal. The meal plan for students living in residence is about $700 a month. A student living on their own could absolutely eat for less than that by buying groceries and cooking. Reality check: the youths of today love Uber Eats and even if you have taught them how to cook, there’s an almost zero percent chance they will always pack a lunch and cook dinner. Let’s assume the student spends $250 a month on groceries and buys five meals per week at $15 a pop. Over an 8-month school year that’s $4,400 worth of food.

Adding it all up, living off campus could save $2,700 per school year. That’s not nothing, but in the grand scheme of things, it’s also not that significant. Living at home, of course, is a whole different matter.

The Extras

These estimates include only the base level of expenses. My numbers don’t account for inflation, living in nicer off-campus accommodations, and other (more expensive) programs. (For example, an engineering program could add another $6,000 a year in tuition.) Other costs are very likely to crop up too. If the off-campus accommodation isn’t within walking distance of school, add $1,200 for a transit pass. If the university is far from where you live, train or even airplane tickets home for Christmas break and Reading Week should be added. Your kid might be very social and the $100 a month I budgeted for going out might be far too low. You get the idea.

Offsetting the Cost

Will you pay for the entire cost of the student’s four-year degree? Maybe, maybe not. Having your child work part-time will certainly help to defray the cost. If we assume they work 20 hours a week at minimum wage, that adds up to about $10,000 over the school year. This brings your cost down to about $14,000 a year. Working over the summer can add another $10,000, but this assumes that they move home rent-free and that they don’t spend their earnings on anything else over the summer (perhaps not entirely realistic).

Savings Plan

If you have a newborn and you contribute $2,500 a year to an RESP to receive the maximum $500 annual government grant, and you earn an average rate or return of 6% per year (recall you can invest the money in all kinds of things including stocks, mutual funds and ETFs), you will have about $98,000 saved by the time they are 18 years old. At that time, their education will cost a little over $125,000 for four years (accounting for 2% inflation, which may or may not be the right number). This is probably a pretty good amount to save if you consider they could contribute by working over the summer and/or during the school year.

If you’re starting a little later, you can still get the government grant from the years you missed out. The nuance is that you can only catch up one year at a time. For example, if you start contributing to the RESP when your child is six years old, you can contribution $5,000 per year for five years (since you didn’t contribute for the first five years of their life) and get $1,000 in grant money instead of the usual $500 maximum annual grant. If you do this and then drop the contributions to $2,500 per year after that, you’ll have about $88,600 by the time your child is 18.

If you have more than one child, they can all be included as beneficiaries in the same RESP plan, which means that if one of them doesn’t use the money you contribute, the others can. If the money isn’t used, you can withdraw it, although with some tax and penalties. (The details are too complex for me to quickly list out here but you can read them online). You probably don’t want to have more money in the RESP than your kids will need, so using your TFSA as an additional savings vehicle is a great option. Read more about this in my blog post “Paying for School”.

Getting Ready

If your child is ready to fly the coop and go off to university, figuring out the cost and how to pay for it might be on your to-do list. While they are filling out applications, doing campus tours, and striving to ace chemistry, you could be doing the money math, making a budget, and discussing options like working or applying for scholarships or bursaries. Exciting times!


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