Should you pay for your child’s college education?
This is a complex issue and there isn’t a “right” answer. For some families, paying for their child’s college education could put them into debt, possibly jeopardizing their own retirement or other financial goals.
According to Embark Student Corporation, 81% of Canadian parents believe it is their duty to pay for their child’s education, with 52% admitting they would go into debt to pay for their child's education as of 2023.
Most financial advisors don’t recommend dipping into your retirement savings or using home equity to help your child avoid college debt.
When creating a financial plan, it is important for families to determine what feels right for them, but they also must act intentionally or the potentially have the window to save for university costs close.
This, perhaps, is the mistake that James and Nola made by not having honest conversations with their daughter long before she ever started applying to colleges. They left it too late, and now that window for Tia has closed.
Smart investing starts here
Get 100 free online equity trades with promo code EDGE100 when you open a CIBC Investor’s Edge account by Sept. 30, 2025. Click now to unlock 100 free trades and take control of your investments.
Get started todayFinding middle ground
For wealthy families, the debate about paying for a university education is a tough one. On one hand, if they pay for everything, their child doesn’t have to worry about going into debt or juggling a part-time job with schoolwork.
On the other hand, they may want their child to have some “skin in the game” so they’re better prepared for the real world. However, with the cost of a university education skyrocketing, parents may want to find some middle ground with their child.
According to the Government of Canada, the total amount of student loans owed sat at $23.5 billion in 2022. In April 2023, the accumulation of interest on the federal portion of a student loan was eliminated, which is certainly helpful in terms of paying off your debt faster. However, it still does not totally eliminate the burden of repayment.
If they could go back in time, James and Nola could have discussed the situation with Tia and explained why they couldn’t afford to pay for all of her college expenses — and perhaps worked with her to come up with some options.
For example, they could have paid a percentage of her costs if Tia paid the remainder. They could have matched her savings from a summer job, or, they could have helped Tia research alternatives such as merit-based scholarships and grants.
Other options to pay for university
Students from families who earn above a certain income threshold won’t qualify for federal student loans, but they may still want to file a free application for federal or provincial student loans.
Even better, they could have started early by setting up a RESP while Tia was still young.
It should be clear from the outset what you’re willing to contribute and what you expect your child to contribute. That’s the case even if you plan to pay for your child’s tuition in full. It should be apparent if there are “strings” attached, such as whether the child is expected to go to a school close to home in order for their tuition to be paid in full.
While James and Nola can’t go back in time, they can have open, honest conversations with Tia about her debt and how they might be able to help.
Maybe they gift her some money, or maybe they loan her some money, with or without interest, that she has to pay back at regular intervals.
They could also co-sign a private loan, which could help Tia get a more competitive interest rate — though it’s important to have a repayment plan in place. Ultimately, if Tia can’t repay the loan, it will fall to her parents as co-signers.
Having a plan could help ease the tension and start Tia off on the right foot as she begins a new life chapter.
Sources
1. 2. Government of Canada: Canada Student Financial Assistance Program annual report 2021 to 2022
3. National Student Loans Service Centre: What’s New
Get up to $500 when you open a Tangerine Chequing Account
From July 8–14, score up to $500 in bonuses when you open a Tangerine No-Fee Daily Chequing Account. Enjoy unlimited transactions, free Interac e-Transfers®, and no monthly fees—plus a limited-time cash bonus. Claim your $500 bonus
