View the most recent version.

The Daily. Tuesday, April 10, 2001

Survey of Approaches to Educational Planning

The vast majority of Canadian parents hope their children will get some form of college or university education, according to a new survey. However, in the case of more than half of these children, their parents have not set aside educational savings for their post-secondary schooling.

The parents of 87% of children aged 18 and under reported to the 1999 Survey of Approaches to Educational Planning that they wanted their children to get an education beyond high school. However, parents of only 41% had savings in 1999 devoted expressly for college or university.

Not surprisingly, the gap between aspirations and savings behaviour was widest in households at the lowest end of the income scale.

In addition, the survey showed that the amount of money parents have been putting aside for the post-secondary education of most children is substantially short of the current estimated total average cost of attendance.

And even if they had savings, most parents expected that their children would require additional financial resources to pay for their post-secondary education. Parents of half the children expected their children would need to take out a loan; in the vast majority of cases, these loans were expected to take the form of government student loans, rather than bank loans or loans from family members.

Again, income played a major role in expectations for needing student loans, which were highest among parents in households in the lowest income groups.

Earlier studies have shown that finishing post-secondary studies plays a major role in an individual's success in the labour market. Post-secondary graduates' earnings tend to be higher, and their chances of becoming unemployed are lower.

In fact, about one-fifth of young people aged 18 to 24 attended university full-time in the 1997/98 academic year, up from 15% in 1987/88. Similarly, one-quarter of young people aged 18 to 21 were enrolled full-time in college in 1997/98, up from 19% in 1987/88.

Note to readers Data in this release come from the new Survey of Approaches to Educational Planning (SAEP), conducted by Statistics Canada in partnership with Human Resources Development Canada. SAEP is the first Statistics Canada household survey to collect detailed information on how Canadians prepare for their children's post-secondary education. The survey was conducted in October 1999 as a supplement to the Labour Force Survey. Data were collected concerning 20,353 children aged 18 years or under in 1999. The survey assessed the means by which parents plan and prepare for the post-secondary education of their children. SAEP collected detailed information concerning two key sets of practices: Financial preparation: This includes whether savings are being set aside for their children's post-secondary education; awareness of the cost of post-secondary schooling; types of savings vehicles; and expectations regarding other means of financing post-secondary studies, including potential demand for student loans. Non-financial preparation: This includes, for example, communicating their aspirations and expectations concerning participation in post-secondary studies to their children; the extent of parental involvement in their children's learning and schooling; and attitudes and practices concerning homework and television viewing. Detailed information was collected for both children and households, allowing analysis by such characteristics as children's age, gender, grade in school, academic performance, number of children in the family, household income, and parental education, occupation, and labour force status. This release focuses on children and the ways in which their parents prepare financially for their post-secondary education.

Saving for a child's post-secondary education

The parents of 80% of the 1.5 million children in lower-income households (those with incomes of less than $30,000 in 1999) hoped that their children would pursue post-secondary studies, compared with 95% of children in households with incomes of $80,000 or more.

However, parents reported education savings for fewer than 20% of children living in households in which the income was under $30,000. In contrast, in households with incomes of $80,000 or more, parents reported savings for 63% of children.

Parents' education level also played a role. The majority of parents, regardless of their level of education, wanted a post-secondary education for their children. However, education savings were reported for only 16% of children living in households in which the parents or guardians had less than high school completion. In households in which at least one of the parents had a graduate degree, the proportion was nearly four times higher, 60.5%.

Post-secondary aspirations and saving for post-secondary education

Savings substantially short of estimated total post-secondary costs

The survey showed that parents generally had saved nowhere near the estimated amount required to put their children through an entire post-secondary education. The median accumulated value of educational savings reported in 1999 for all children aged 18 or under in 1999 was $3,000 (educational savings were above this level for half of all children and below this level for half).

There was a clear relationship between the amount of savings and a child's age. For those with educational savings, parents reported median accumulated savings of $1,500 for each child aged four or under and $5,000 for each child aged 14 to 18.

However, in the fall of 2000, for example, undergraduate arts students in Canada paid on average $3,378 in tuition, up from $1,496 in 1990/91. Undergraduate tuition fees vary considerably from province to province and for different programs of study. Undergraduate arts tuition fees were lowest for residents of Quebec, where tuition costs remained at less than half those in other provinces in virtually all fields of study.

Median savings for each child for education declined as the number of children in the household increased. In households with only one child, median accumulated savings were $3,600 in 1999. That fell to $3,000 per child in households with three children, and to $2,500 per child where there were four children or more. For all age groups, median savings tended to increase with household income.

Most parents anticipated their children would work while in school

Parents of 70% of children anticipated that their youngsters would help put themselves through college or university by working while in high school. And an even greater percentage of children, 86%, were expected by their parents to work while attending a post-secondary institution.

Nevertheless, parents of 50% of children expected that their children would require additional financial resources, such as loans, to pay for their post-secondary education, whether or not they had educational savings set aside.

For 94% of children, these loans were expected to take the form of government student loans, rather than bank loans or loans from family members.

Expectations regarding other means of financing post-secondary education

Two-thirds of children in households in the lowest income group were expected by their parents to need to take loans to help finance their post-secondary education. This percentage decreased steadily as household income rose. Still, about one-third of children in the highest income group were expected by their parents to need a loan.

Potential demand for loans was highest in New Brunswick, Nova Scotia and Prince Edward Island, where two-thirds of children were expected by their parents to need to rely on loans to help finance their post-secondary education.

Parents began saving when child was young - or not at all

Parents who had savings set aside expressly for their children's post-secondary education tended to begin those savings when the child was very young. Those who did not start when the child was young tended never to start.

In the case of one-half of the children for whom there were educational savings, the child was one year old or less when their parents started saving for their post-secondary education. In the case of 75% of children for whom educational savings were reported, the child was 5 or younger when savings began.

Households reporting savings used various types of savings plans. The most common were Registered Education Savings Plans (RESPs), reported by parents of about 40% of children.

These were followed by in-trust accounts, reported for 35% of children. Other types of savings plans, such as bank accounts and Registered Retirement Savings Plans, were reported for 48% of children. Households reported using more than one type of savings plan for individual children.

The use of RESPs was lowest in Prince Edward Island, Saskatchewan and Alberta. where such plans were reported for about one-third of children. RESP usage rates were highest in British Columbia, where they were reported for 45% of children for whom there were educational savings, and Newfoundland, where they were reported for 44% of children.

Types of education savings plans

For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services, Centre for Education Statistics (1-800-307-3382; educationstats@statcan.gc.ca) or Kathryn McMullen (613-951-0203; kathryn.mcmullen@statcan.gc.ca), Family and Labour Studies Division.