Publication
Culture, Tourism and the Centre for Education Statistics
Lifelong Learning Among Canadians Aged 18 to 64 Years: First Results from the 2008 ASETS
Sources of support for the next generation of postsecondary education students
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Two thirds of children aged 0 to 17 had savings for their future postsecondary education studies
The proportion of children with RESP savings was higher for younger children
The proportion of children with savings increased with parental income
Children with higher grades, whose parents had higher education aspirations for them, and whose parents attained a higher education level, were more likely to have education savings
Summary
Notes
With the rising costs of education, early financial planning for postsecondary education (PSE) is not only advantageous but in many cases necessary. Parents and other family members play an important role in meeting postsecondary costs and many factors determine whether a parent is able to save for their children's postsecondary education.
This section focuses on the child cohort of the ASETS, children aged 0 to 17, with a focus on whether their parents or guardians1 had saved for their future postsecondary education. Additionally, among children with postsecondary education savings, this section explores the proportion with savings in the form of a Registered Education Savings Plan (RESP).
Two thirds of children aged 0 to 17 had savings for their future postsecondary education studies
According to the ASETS, the majority (68%) of children aged 0 to 17 had parents who had saved for their future postsecondary studies and of those with savings, 69% had RESPs (Chart 4.1).
As shown in Chart 4.2, the proportion of children aged 0 to17 with savings for postsecondary education increased with the age of parents. Fifty-three percent of children whose parents were 18 to 24 years had saved for their education and this increased to 72% for those whose parents were 55 and over.
Among those children whose parents had saved for their education, those with parents 35 years and older were slightly more likely to have RESP savings for their education than children with younger parents (18 to 34 years).
The proportion of children with savings for postsecondary increased over time
As shown in Chart 4.1, parents are paying attention to the rising cost of education and, over time, a higher proportion have started planning early for their children's future postsecondary studies.
In 2008, almost 7 in 10 children (68%) aged 0 to 17, whose parents expected them to go beyond high school, had savings for their postsecondary education, an increase from 43% in 1999 and 52% in 2002. Over time, the proportion of children with RESP savings has also increased. Of children who had savings put aside for their education, 69% had savings in RESPs in 2008, up from 42% in 1999 and 55% in 2002.
The proportion of children with RESP savings was higher for younger children
As shown in Appendix Table A.4.1, the proportion of children with PSE savings did not vary greatly by the age of the children; however, among children with savings, the proportion with RESP savings was higher for those between the ages of 0 and 12 compared to those between 13 and 17 years. This may be a reflection of the introduction and increased awareness of the Canada Education Savings Grant (CESG) program which was introduced in 1998 (see text box 'Awareness of the Canada Education Savings Grant (CESG) program'.)
Awareness of Canada Education Savings Grant (CESG) program
The Canada Education Savings Grant (CESG) was introduced in 1998 to encourage parents to save for their children's postsecondary education through a Registered Education Savings Plan (RESP)2. The CESG pays 20% on the first $2,500 of annual contributions to an RESP. Depending on the family's net income, additional grants of 10% or 20% on the first $500 of annual contributions are available. The CESG lifetime limit is $7,2003.
The ASETS showed that older children were less likely to have parents who were aware of the CESP (Appendix Table A.4.2). Eighty-four percent of children between 0 and 4 years, and 80% of children aged 5 to 12, had parents who were aware of the CESP. This percentage was lower (75%) among children aged 13 to 17.
The proportion of children whose parents were aware of the CESP also varied by the age of the parent, (Chart 4.3). It was the lowest (65%) for children with younger parents (18 to 24 years) and the highest for children whose parents were 45 to 54 years (81%).
Chart 4.3 Awareness of the Canada Education Savings Program (CESP), by age group of the parent, 2008
The proportion of female children with savings was slightly higher than males (69% versus 66% respectively). Females also had a higher proportion of RESP savings (71% versus 67% respectively).
The proportion of children with savings and RESP savings also varied by the number of children in the household. Children in 2-child (72%) or 1-child households (68%) were the most likely to have savings for education. While children in three-or-more child households were less likely to have savings (62%), among those who saved, children in these households were more likely to have RESP savings than children in 1-child households (Appendix Table A.4.1)
The proportion of children with savings increased with parental4 income
Not surprisingly, a strong relationship existed between the proportion of children with education savings and parental income (Appendix Table A.4.1). Children in families with parental income of $100,000 or more were almost twice as likely to have education savings compared to children in families with a parental income of less than $25,000 (83% versus 42%, respectively). The proportion of children with savings who had RESP savings also generally increased with income but the differences across the income categories were not as pronounced (Chart 4.4).
Children in Alberta and Saskatchewan were the most likely to have savings for education while children in Nova Scotia and Quebec were the least likely to have any. Of children who had savings, those living in Alberta were the most likely to have an RESP while children in Nova Scotia were the least likely to have one. With the exception of Newfoundland and Labrador, children in Quebec and in provinces east of Quebec were the least likely to have savings for their education while children in Ontario and the provinces west of Ontario were the most likely to have savings (Chart 4.5).
Children with higher grades, whose parents had higher education aspirations for them, and whose parents attained a higher education level, were more likely to have education savings
According to the ASETS, children who were performing well in school, whose parents had higher education aspirations for them and whose parents attained a higher education level were more likely to have education savings. Almost three quarters (73%) of children whose last grade in school was above ninety percent had education savings. The proportion decreased to 37% for children whose last grade in school was less than fifty percent. It is interesting to note that while children whose last grade in school was less than fifty percent had the lowest proportion of parents saving for their education, a high proportion of those with savings (71%) had RESPs.
Seventy percent of children with parental aspirations for a university education had savings compared to around 50% of children with parental aspirations of trade or college (Appendix Table A.4.1). Similarly, children whose parents had a postsecondary credential were almost twice as likely to have savings as children whose parents had less than high school education (72% versus 37%).
Although a higher proportion of children who were born in Canada had education savings, of those with savings, a slightly higher proportion not born in Canada had RESP savings (Appendix Table A.4.1).
Summary
Parents are paying attention to the rising cost of education. Almost seven in 10 children (68%) aged 0 to 17 years had savings for their postsecondary education and of those with savings, 69% had RESPs. The ASETS highlights the important role of parental values of education and children's academic performance on parental saving behaviors. Children with parents who had a postsecondary education were almost twice as likely to have savings compared to children whose parents had less than high school education (72% versus 37%). As well, almost three quarters (73%) of children whose last grade in school was above ninety percent had education savings while the proportion decreased to 37% for children whose last grade in school was less than fifty percent.
Over time, a higher proportion of children had parents who started planning early for their future postsecondary studies and a higher proportion used RESPs. In 2002, 52% of children whose parents expected them to go beyond high school had savings compared to 43% in 1999, and the proportion of children with savings who had RESPs increased from 42% in 1999 to 55% in 2002.
Notes
1. For the purpose of this section, a parent refers to the person most knowledgeable about a child 0 to 17. For 99% of children the PMK was a parent or guardian.
2. Parents, grandparents, relatives or friends can all contribute to an RESP.
3. For more information on the CESG and RESPs see: http://www.hrsdc.gc.ca/eng/learning/education_savings/index.shtml
4. Parental income refers to the income of the person most knowledgeable and their spouse or partner.
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