A recent article by the Globe and Mail regarding the increasing cost of Post Secondary tuition hit close to home.  In the article, it is projected that a child born today going to University 18 years from now would face a cost of over $100,000 for a typical 4 year program.  To add salt to the wound, the $100,000 is for a child who lives at home – it could cost over $130,000 for the students who move away.

As Baby FT was born in 2008, I assume the projections for the cost of University will be fairly close to what the article states.  As we started an RESP in 2008, will it be enough to fund Post Secondary Education?

We decided to use the RESP program which allows up to 20% of your (after tax) deposit annually will be matched by the government, up to $500 per year.  So to max out the government grant, $2500 would need to be deposited annually.  Investments can grow tax free within the account, but withdrawals will be taxed in the hands of the student which shouldn’t be a problem as they typically make very little income at that stage.

With regards to the RESP investment strategy, we decided to with the TD e-series to index the portfolio over the next 17 years or so.  The plan is to gradually reduce our equities exposure as the withdrawal period closes in.  We deposit $2500 lump sum annually with the government depositing $500.  This results in $3000 in new cash every year to invest with.

My assumption is that the portfolio will grow 5% annually after inflation which, after 17 years of growth, will result in a portfolio size of approximately $88,000.  This is not too far off the $100k required IF our child decides to live at home during University years.  If moving away is the plan, then I the difference will have to be made up somewhere.  Whether it’s student part time work, student loans, or if Daddy needs to open up his wallet once again – a plan needs to be put in place.

The issue of who should pay for post secondary education is a well publicized.  Some believe that post secondary education should be the child’s responsibility while others feel the bill should be covered by the parents.  I’m in between the two camps.  I managed to pay my way through school without student loans by working part time, choosing a degree that had paid work terms, staying at home and living frugally.  However, even that (and RESP money) may not be enough in the future with rising tuition and living expenses.

My initial thoughts (which may change over the years) are that we’ll cover all education expenses, but baby FT will be responsible for living expenses.  The amount that baby FT will have to come up with will depend whether or not they want to live at home.  If the kid(s) decide to live away from home, then they’ll most likely need to fund their living expenses on their own (or a portion of) though part time work, loans (eligible if using RESP?), or scholarships.

Who knows, if we can ingrain a good savings habit in them early, then perhaps they’ll have some cash to cushion the blow.

What are your thoughts on the rising cost of tuition?

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When my son was a year and a half, we did a 3 month work term in the Philippines. We were working on a community development project on one of the remote islands for one week of our time there. It was an 18 hour ferry ride from the nearest port.

While we were there my son got very sick. We took him to the local clinic where they admitted him and tried for hours to insert an IV into his veins without success. It was one of the most difficult things I’ve had to watch. How could I put my son through this? What kind of parent was I to put my child’s life at risk because of my work?

He screamed until he was worn out and still he got sicker. He was losing fluids faster than we could get them into him. His veins were too small to insert the IV. The nurse matter-of-factly told us that he was going to die. In truth, she said, “When he dies, may I have his portable crib?”

We knew we had to get him off the island to save his life. We had health insurance that included emergency medical evacuation. We needed to get approval. We called and the person on the phone asked to speak to a the doctor in charge. After a lengthy conversation, our health insurance provider told us that the doctor on staff had the situation under control and didn’t think we needed to be medically evacuated. Our coverage was denied.

We could see our son was fading. We knew we didn’t have time to wait for the morning ferry and begin the 18 hour journey back to mainland. He was dehydrated. His sunken eyes were rolling back in his head. He couldn’t lift his head. He was too sick to cry.

It was at that point that we decided money no longer mattered. We called directly to our supervisor and ordered our own medical evacuation. I said to Brian, “I don’t care if this costs a million dollars. I don’t care if we’re going to be in debt for the rest of our lives. Our son is dying and we need to get him off this island now.”

A small plane was called. The local people and some of our colleagues worked at quickly filling in potholes in the dirt road. The local people stood along the road as the plane landed to keep the stray dogs and pigs from running out onto the road. A plane hadn’t landed on that island for as long as anyone could remember.

It was an hour flight to Manila where we were taken to an excellent hospital. We ran into the emergency room with our son in our arms, barely conscious and fading fast. They took him from us and immediately inserted a special pediatric IV. They told us if we didn’t get there when we did, he would have only had hours left to live. He stayed in the hospital for 5 days. They never could find the cause of what made him so sick.

In the end, when the organization we work for heard our story, they covered all the costs of the medical evacuation. They knew we made the right choice.

Later, as my son was recovering in the hospital, I began to think of the incredible people we’d left behind on that remote island. These were people that took us in, fed us, housed us, cared for us, advocated for us, cleared the road and helped us when we needed it so desperately. Yet, if it had been any of their children that had faced the same situation, their child would have died. They simply didn’t have the money.

It makes me sad that access to money is what saved my son’s life. There came a point when money didn’t matter and I would have be willing to pay anything. I know I made the right choice to do whatever it took. It seems unfair that I had a choice many people never get.

Have you ever been in a situation where money didn’t matter?

Kathryn works in public relations and training for a non profit. In her off hours, she volunteers as a financial coach helping ordinary Canadians with the basics of money management. Her passions include personal finance and adult education. Kathryn, along with her husband and two children live in Ontario.

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