Study: Saving for post-secondary education

Parents who are in the highest income group, who own their home mortgage-free or who are university-educated are more likely to save for the post-secondary education of their children. However, education saving is also influenced by other factors, such as the child's performance at school, parental aspirations, awareness of education savings programs, and grant expectations.

In 2002, half of the children under the age of 19 had an average of $8,600 put aside by their parents for post-secondary education.

Over two-thirds of children from the highest adjusted income group ($40,000 or more) had savings put aside for their post-secondary education compared with less than 30% of children from the lowest income group (less than $15,000). Also, the amounts saved by the highest income families were significantly higher than those of the lowest income families. However, characteristics other than income explained about half of the $6,100 difference.

Homeownership is a major factor in the incidence of education savings. Children who lived in a mortgage-free home were most likely to have greater savings. Even after controlling for income and other factors, they had significantly more savings than children living in a mortgaged home. On the other hand, the difference between the latter and those living in rental housing, while still significant, was relatively smaller.

Children with at least one parent holding a university degree had significantly more savings accumulated than children with parents who had a high school diploma or less. Also, parents whose children performed well at school and parents with higher aspirations were more inclined to save.

Families who were aware of the Canada Education Savings Grant program saved significantly more, regardless of income. But the expectation of grants based on financial need to help pay for post-secondary education was associated with lower accumulated savings. In this case, savings may well fall short of actual needs for large numbers of students hoping to pursue higher education.

Definitions, data sources and methods: survey number 4442.

The article "Saving for post-secondary education" appears in the July 2004 online issue of Perspectives on Labour and Income, Vol. 5, no. 7 (75-001-XIE, $6/$52), which is now available.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Sophie Lefebvre (613-951-5870; sophie.lefebvre@statcan.gc.ca), Income Statistics Division.