How To Help Your Kid Pay For University Or College

How To Help Your Kid Pay For University Or College

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated November 4, 2021

According to studies, Canadians with good foundational skills are more likely to graduate from high school and post-secondary studies. Additionally, those who spend more time developing their education and skills have better success on the job market, as well as more interest in the social and political health of their communities.

Most important of all, people with higher levels of education and more refined skill sets tend to have better physical and mental health. To ensure that your child becomes happy, healthy and self-sufficient as the years roll by, putting them through college or university can be a fantastic, albeit expensive way to accomplish that goal. 

Read this to learn how you can help your kid pay for college or university in Canada.

The Cost Of Education In Canada

In our country, tuition fees vary depending on factors like where your kid goes to school, what program they’re in and what supplies they need. You may also have to consider transportation, meals and rooming, which are especially pricey if your kid doesn’t live near campus, they’re an international student or they’re studying in another region.

For example, according to the Government of Canada, undergraduate students who are enrolled in full-time studies will see their tuition fees increase by an average of 1.7% during the 2020 – 2021 school year, while graduate students will see a 1.6% rise. 

That said, the cost of tuition also varies by province/territory. To give you a basic idea, here’s a chart detailing the average yearly cost of tuition in Canada for 2020 – 2021: 

PriceProvince/TerritoryBusiness Management & Public AdministrationHumanitiesPhysical Science, Life Science & Technologies Social Science, Behavioral Science & Legal Studies 
1Nova Scotia $8,315$7,542$8,305$7,686
2New Brunswick$8,053$7,456$7,867$7,587
5Prince Edward Island$6,390$6,390$6,390$6,390
7British Columbia$5,834$5,267$5,413$5,496
8Manitoba $4,828$4,176$4,486$4,198
9Quebec $3,133$4,240$3,483$3,226
11Newfoundland & Labrador$2,715$2,618$2,687$2,699

Luckily, while tuition fees have risen, 5 provinces (NS, NL, BC, SK, PEI) have decreased other compulsory fees for certain undergraduate and graduate students due to the COVID pandemic.

Check out our budgeting tips for university students.

How Can You Help Your Kid Pay For College Or University In Canada? 

Canadian students are fortunate to have reasonable tuition costs compared to many other countries. Then again, not everyone can afford their kid’s college or university education without financial help. In that case, there are solutions available, including:

Open A Registered Education Savings Plan (RESP) 

A Registered Education Savings Plan (RESP) is a government approved investment account that allows you to make contributions toward your child’s education. Family and friends can also contribute. Whatever money you deposit into the account then generates interest over time and is tax-deferred until a withdrawal is made. 

In Canada, many financial institutions can offer you an individual RESP or an adjustable family plan for multiple children. The beneficiary doesn’t have to be your kid either. You can set up an RESP for your grandkids, nieces/nephews or even family friends. Watch out, because all RESP accounts have a lifetime contribution limit of $50,000.

You can contribute to the account for up to 31 years, which can remain open for a maximum of 35 years. Even small deposits make a difference and the longer the funds are in the account, the better. To qualify for an RESP, your prospective beneficiary must:

Obtain A Grant Through The Canada Education Savings Grant (CESP)

If you and your beneficiary both have RESPs, your kid may also qualify for a Canada Education Savings Grant (CESG) from Employment and Social Development Canada (ESDC), which provides extra contribution room for their account. This program is an incentive for parents, family and friends of children pursuing post-secondary studies. 

Essentially, if you deposit funds into any eligible RESP accounts, the ESDC will pay 20% of your yearly contributions directly into your child’s account. For basic CESG, the maximum amount is $500 per beneficiary (or $1,000 with grant room in the account from the past year) to a lifetime limit of $7,200 and no specific family income is required. 

Plus, ESDC will provide an additional amount of yearly CESG contribution room for every other beneficiary with an eligible RESP. Unlike basic CESG, however, the extra amount is based on your household’s adjusted income and total contributions:

Adjusted Income in 2021$49,020 or lowerMore than $49,020 but less than $98,040More than $98,040
Basic CESG on first $500 of yearly RESP deposits 20% or $10010% or $50Child/beneficiary is not eligible
Basic CESG on first $2,500 of yearly RESP deposits20% or $50020% or $50020% or $500
Maximum yearly CESG based on income & contributions$600$550$500
Lifetime CESG Limit$7,200$7,200$7,200

Get A Grant Through The Canada Student Grants Program (CSGP)

There are many federal student grants for Canadians, as well as specific provincial or territorial programs through the governments of Nunavut, Quebec and the Northwest Territories. Unlike a student loan, a Canada Student Grant doesn’t need to be repaid and has no fees. Instead, it’s an incentive for eligible students to graduate without debt. 

Generally, student grants are available at the start and halfway point of the school year. The amount of funding that a student can qualify for is calculated according to their:

  • Province or territory
  • Household income
  • Dependants
  • Tuition fees
  • Daily living costs
  • Disabilities (if any)

Government Student Loans

A student loan allows your child to borrow money to finance their education and those funds eventually need to be repaid with interest and fees. While plenty of schools and financial institutions offer their own private student loans, there are also student financial aid programs available through the federal and provincial/territorial governments.

Many students are more inclined to choose government student loans because they involve better rates, fees and terms than those from private lending sources. 

Today, the federal government has two different student financing programs; one being the Canada Student Grant Program (CSGP) and the other being the Canada Student Loan Program (CSLP):

Canada Student Loan Program

This program offers a subsidized loan to eligible part or full-time students. When approved, the student can get up to 50% of their tuition costs in federal loans and the federal; government will cover any interest until they graduate. The student is also given a 6-month grace period after graduating to find a job before they have to start repaying their loan. Be careful, as extra interest will apply to the final loan balance during repayment.

Don’t forget, government-subsidized student loans are offered on provincial and territorial levels as well. Each province/territory has its own student financial assistance programs, funding amounts, conditions and budgeting considerations. Check out this chart to see what kinds of student loans you can apply for in your province or territory: 

Province/TerritoryStudent Loan Program Name
AlbertaAlberta Student Aid
British ColumbiaStudentAidBC 
ManitobaManitoba Student Aid 
New BrunswickStudent Financial Assistance New Brunswick 
Newfoundland & LabradorStudentAidNL
Northwest TerritoriesStudent Financial Assistance Northwest Territories
Nova ScotiaStudent Assistance Nova Scotia 
NunavutStudent Funding Nunavut   
OntarioOntario Student Assistance Program (OSAP)
Prince Edward IslandP.E.I. Student Loans, Bursaries, Grants & Awards
QuebecStudent Financial Assistance Quebec 
SaskatchewanSaskatchewan Student Loans 
YukonYukon Financial Support For Students 

Private Student Loans And Lines Of Credit 

As mentioned, student financing can also be acquired through banks, credit unions and online lenders. Most of these private companies offer two solutions:

  • Non-Government Student Loans – When it comes to private lending, a student loan will normally come in the form of a personal loan. You borrow a lump sum of money via direct deposit and must repay it through installments with interest, like a government student loan, only with more flexibility. Then again, it’s often harder to qualify with a private lender and interest rates may not be as affordable.
  • Student Lines of Credit – Many lenders can also offer you a revolving student line of credit that’s accessible online or at your branch with a special debit card. The credit line is basically free until you start using it, which automatically leads to interest and monthly payments, with the option of partial or minimum payments. Full-time students normally qualify for more credit than part-timers.  

The eligibility requirements for a private student loan or line of credit vary depending on which lender the borrower applies with, as well as the strength of their income and credit. Thankfully, their child’s grades aren’t normally a deciding factor like they would be with a government student loan, grant, scholarship and bursary.

Remember, private student loans and lines of credit can be tougher to qualify for than government financing. Plus, the rates, fees and terms aren’t always as appealing. This can lead to a lot of unforgivable high-interest debt and legal troubles, whereas government institutions are more reasonable under the right circumstances.

Find out how to build credit as a college student.

Paying For University In Canada FAQs

Can I defer repayments by refinancing if I switch careers or go back to school?

Unfortunately, only government institutions offer loan deferral but if you have an active student loan or line of credit, a private lender may offer you a personal loan with a better interest rate to pay it off. This is called refinancing and it can also help you save interest on non-student debts, like credit cards, car loans, mortgages and other loans. Since you already have one type of debt to cover, you may have to be extra qualified to get approved for a refinancing loan. That means you need a solid income, decent credit, a clean payment history and a full-time job for at least 3 – 6 months. So, qualifying for refinancing is sometimes difficult if you switch careers and no longer have a steady income or if you go back to school and accumulate compulsory tuition payments. 

Can I get a private student loan if I have bad credit?

As long as you pass your lender’s requirements, you shouldn’t have trouble getting approved for a private student loan. However, if the approval process involves a credit check and you have bad credit or no credit history, you may have to find a cosigner or offer collateral to secure the loan and assure the lender that payments will be made. If you don’t have a cosigner or collateral, there are also many alternative lenders in Canada that work specially with bad credit and low income borrowers. Be very careful here, because some bad credit loans come with much higher interest rates and fees, as well as shorter repayment terms and less forgiveness than government student loans.  

What is the Canada Learning Bond Program?

Under the terms of the Canada Learning Bond (CLB) program, kids from low-income families can be awarded with up to $2,000 in RESP contributions, courtesy of the federal government. Unlike the Canada Education Savings Grant (CESG), the receiver doesn’t need to make their own RESP contributions to qualify for this type of bond.

Trying To Pay For Your Kid’s Post-Secondary Education?

While college or university tuition is pricey, it’s worth the money to see that your child gets the best education you can afford. Don’t worry, because there are many different financial solutions available in every province and territory if you know where to look.           

Rating of 5/5 based on 1 vote.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and traveling the world in search of the coolest sights our planet has to offer. Bryan uses the BMO Cash Back Mastercard to earn cash back on everything from boring bill payments to exciting excursions. He is also a strong saver, holding both a TFSA and an RRSP account in order to prepare for his future while taking full advantage of tax benefits.

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