When my daughter (K.B) started grade twelve, we began to talk more seriously about what she wanted to do after school ended. Did she want to backpack around Europe or buy a car? Did she want to go into a trade and start working right away? Or did she want to go to college and get a diploma or degree?
She knew she wanted to go to college but didn’t know how to pay for it. Student loans was the first thing that came up and I knew it was time to talk more seriously about how to fund her education. I asked her to wait a bit so we could chat more about her choices – I didn’t want her to commit to something before looking at it from different angles.
As some of my regular readers may know, I have my own history with student loans and I wasn’t eager for my daughter to repeat my mistakes. My parents didn’t know anything about student loans so I just did what I was told and signed on the dotted line. That was a mistake.
Consequently, my student loans haunted me for more than ten years and cost me a lot more than money. I wanted to do things differently with K.B. and so I decided to have this conversation with her so she could, at least, be educated about her choices. Thankfully, my daughter is already smarter about money than I was at her age and we can help her with the rest.
Things to Think About: What are the general costs and how can we save?
One of the first things I did was do some research on some basic costs for education today. What was the average tuition at college versus university? How did most students pay for their education? Would my daughter qualify for scholarships or student loans?
A really great first introduction came from LowestRates.ca’s Back to School Money-Savings Guide. It covers all things student and financial and I found it really useful for getting a feel for what’s out there. They’ve created helpful guides for things like food, housing, and transportation – all specially designed with the student in mind. The guide also talks about apps that can help students find housing, split bills with roommates, and save money on gas.
One of my favourite things about this guide is that they’ve done the research on things like the top student-friendly cell-phone plans, housing costs, and student aid availability across Canada. They’ve even done a cost comparison on coffee complete with mug discount, how cool is that? It also has great resources for researching scholarships and bursaries and more information on student loans – like Yconic, a scholarship and lending site. They are also offering a $25 gift card if you search for and buy auto insurance through them.
Once I got a feeling for all the education expenses out there and some ways to save, I could move on to the actual conversation with my K.B. Here’s how I did it with my own daughter:
Answering the Age Old Question: What do I want to do when I grow up?
K.B. has been pondering this for the better part of a year. She was keen to go into veterinary medicine for most her childhood but recently decided that she wanted to do something different. She loves video games and has a gift for writing and drawing so she decided on a career as a video game designer.
I was a little concerned about K.B.’s choice because this didn’t fit into my “traditional career path to follow” box but I figured it wasn’t really my decision. In addition, the diploma/degree she would be pursuing would also give her other career options if she didn’t have luck with her first choice. So really, it was a win/win for both of us.
Getting Real About the Facts: Can I afford it?
We started the conversation with an honest discussion about how much we could afford to contribute to her education. She has about $6,000 in an RESP but told her we wouldn’t be able to offer much beyond that at this point.
K.B. wanted to get a degree in New Media so we talked about the best way to make that happen. We researched how much schooling would cost against how much she could expect to make after getting her credentials.
It was important to me that any diploma program she chose would give her the option of moving onto a degree – many colleges have transfer agreements with universities so the diploma can count towards coursework at the university. I didn’t want all her diploma work to be a dead end if she ever wanted to get more education.
We discovered that a local trade school offers a 2 year New Media Diploma. In addition, they had a transfer agreement with a local university where the diploma would count as two years towards her university degree. And she could pursue the university degree through distance education so she could still work, thus avoiding more student loans. They published a survey of their recent graduates employment rates and wages:
From there, we worked out that the costs for attending would be about $30,000 in total. We factored in everything from tuition and books to housing, groceries and transport. It was a fairly realistic budget including things like socializing, clothing, and cell phone costs.
After that, we calculated how much she could make after she was done her degree or diploma. According to the trade school’s survey, annual earnings varied between $40,000 and $80,000 and their graduates had a 90% employment rate. Payscale.com has her chosen profession coming in at $50,000 for average salary.
These figures will give us something to work with for when we answer next week’s “The Funding Question: How do I pay for it?”. Come back on the following Monday to find out more about how we figured out how to fund her education and cover her living expenses.