The advantage of starting to save early – when the children are still young – is obvious, if family savings are important as a source of funding for post-secondary students. Matching grants are triggered by amounts saved each year, generating greater returns through compounding interests. For example, on an investment of $240 per year over the child’s first 18 years generates almost $2000 more in total savings than the same total amount invested just during the child’s high-school years.
In order to appreciate the advantages of early investment, one must recall what is known about when and how students make their decisions.
Tendency to early decision:
Well-before they finish high school, students have already decided whether they would be going for post-secondary – even university – education. In the majority of cases, these decisions are made in middle school or junior high school. Almost half the students in almost any sample say they arrived upon their decision to attend PSE even before they reach high school has policy implications about when programs focused on affecting PSE choices need to begin.
In these early stages, children look to parents for advice, more than teachers or guidance counselors. Family members are the most common source from which students learn about post-secondary financial assistance.
Assessment of possibilities available:
Neither students nor their families are well-informed about the costs of post-secondary education and the different means of financing it. Generally, both the students and their family members overestimate the cost of PSE and the possibility of finding sources of financial assistance outside of family. It has been seen that parents are no more enlightened on the topic of financial assistance than students. Awareness and knowledge may be especially low in low-income families, where the parents have not attended post-secondary education themselves. While parents claim to have discussed post-secondary education with their children, more than two-thirds of them do not discuss specifically the financial aspects of post-secondary. The largest segment only discusses how expensive technical schools and universities are. The next (smaller) segment discusses in particular what they are doing in order to be in the position of helping their children financially in the event of post-secondary admission. The smallest segment discusses the ins-and-outs of financial assistance offered by government agencies and schemes. The higher the parents’ educational attainment, the more the possibility of their having discussed financial planning for their children. To quote the Canada Millennium Scholarship Foundation (2006),”Students who may need the most encouragement and planning in order to access post-secondary education are the least likely to be having these discussions in their families.”
Absence of good info and the ‘anchoring bias’:
In the context of early decision-making about post-secondary education, the factor of the absence of good info is especially important. Once they have taken roots, it is extremely difficult to reverse negative attitudes. This is the ‘anchoring bias’, wherein persons rely on the initial info available to them. This leads them to wrong conclusions.
Better to know than not to:
The very existence (and acknowledgement thereof) of education savings funds reframes the conversation about financing possibilities within the family.
A plethora of savings opportunities:
There is already a firm foundation as far as savings schemes for children’s education goes. Registered Education Savings Plan or RESP plans notably nicely as a financial savings mechanism because the money isn’t always counted against your toddler when making use of for economic useful resource, as the account is to your name.
