Ask an expert: Planning to pay for school

Q. What steps can parents with kids in university take if they help their children pay for school?

A. Parents must understand what their current cash flow needs are and how much they can afford to help their children without putting their financial futures at risk. If parents cannot cut back on expenses and have to dip into current savings, or save a lower amount each year while their children are in school, they need to plan for this. And parents should tell kids that funds are limited.

It’s also important for students to understand where their money is going while they’re in school so they don’t run out of money before the term is complete.

Parents, help your child create a budget. This includes tuition and the costs of books, as well as regular living expenses, like rent if the child isn’t living at home, food, transportation and entertainment. Students need to balance discretionary expenses and make sure they’ll be able to stay within a spending limit. Otherwise, they might be putting future goals at risk (like moving out on their own, purchasing a house, or starting a family or business).

Scholarships and bursaries are a fantastic way to reduce tuition costs. Look to the university for scholarships and bursaries first. Students are automatically considered for some, but there are many more they can apply for, including scholarships for students studying in a certain field or coming from a specific background.

Often, scholarships are based on income needs, but many are not. For example, some people may get rejected from provincial student assistance programs and decide not to apply for a scholarship because they think they won’t be eligible. Students should still apply, though, because some scholarships are available even if the student doesn’t receive a loan. In Ontario, the government also offers 30% off tuition for students that meet certain requirements. Scholarships can also come from uncommon places like parents’ or students’ employers.

Read more.

Susan Daley is an investment advisor at PWL Capital Inc. She can be reached at sdaley@pwlcapital.com.