Student Money Guide: How to pay for school and have a life—for both students and parents


School is expensive—and so are the extracurriculars. This personal finance guide breaks down how to afford school for students and those who support them.

Student Money Guide: How to pay for school and have a life—for both students and parents

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There’s more to college and university than the classes. Navigating the costs that come with a post-secondary program is just as much a learning experience as Psych 101—for both students and their parent(s) and/or guardian(s). And with that in mind, this comprehensive guide includes articles for those going to school and those who are supporting them (including emotionally). 

The MoneySense Student Money Guide begins with the basics: How to help children understand the value of money; how to set them up with their first bank accounts; and all about registered education savings plans (RESPs).

When kids are grown and ready for college or university, check out the sections on applying for student loans, scholarships and bursaries; covering tuition costs; handling housing expenses; and more. 

What do you need help with today? Click on any topic in the list below to jump to the full information in this guide:

How to plan to pay for school at any age

For parents and guardians:

  • The best ways to help kids financially
  • How to set up kids, teenagers and young adults up for success with money
  • How to get kids in the habit of saving
  • Strategies for teaching kids about money
  • What is an RESP?
  • How to withdraw from an RESP
  • How to make RESP withdrawals for kids with different educational paths
  • How to save money on student housing costs

For students:

  • Financial aid for college and university in Canada
  • How to apply for student loans and bursaries (yes, OSAP, too)
  • How to save money while you’re in school
  • The best credit cards for students
  • The best bank accounts for students
  • Managing your finances: Can you afford a car? Can you afford to move out on your own?
  • How to pay tuition and pay off your student loans

How to save money for an education, parents-edition

The best ways to help kids financially

Regardless of whether they are fast approaching post-secondary school or just graduating from kindergarten, your kids will be better prepped for school as soon as you both create a savings plan. 

There are a few different options to help support your children financially, while they are in school. The most common saving tool for children is a registered education savings plan (RESP). This is a tax-deferred savings plan used to fund post-secondary education costs like tuition, books and other expenses for trade school, college or university.

You can also contribute to a tax-free savings account (TFSA) for a child or grandchild. TFSA withdrawals can be made anytime and used for education, a home down payment or other purposes. If you’re an adult who has already maxed out your RESP, the TFSA allows you to save for the children in your life. Not only does the money inside a TFSA grow tax-free, but there’s no tax when you withdraw. However, there are annual contribution limits.  

Learn more about the best strategies to help kids financially—through TFSAs, real estate and life insurance.

How to set up kids, teenagers and young adults for success with money

Preparation and practice are the keys to mastering any skill—including money management. Here we break down, based on age, what to teach the kids in your life (it does take a village, after all, right?).

  • Age 0 to 6: At this age, they’ve probably started to take note of your spending habits, so take them through your weekly shopping routines; even if you’ve switched to getting your groceries online, talking through your decisions about what to buy and what constitutes a good price, or not, sets a positive example. Giving kids an allowance and letting them make money mistakes (and wins!) will help them to grasp the fundamentals. Activities like playing “store” can help children learn the money basics, too. Read on for more information on helping small children learn about money.
  • Age 7 to 12: This is such a great age for kids. They have enough independence but they’re still appreciative of your support (and not just because you own the Bank of Mom & Dad). So an allowance is a good idea, but so is talking about your own spending habits—even if it’s in a drive-thru about what you are willing to pay for fast food, for example. They should be able to learn and understand budgeting and the reasons behind spending money. In turn, they will learn about saving, too. It’s also a good time to help them open a bank account and set small goals. Read more on spending and saving for adolescent kids.
  • Age 13 to 17: As teenagers start earning an income from part-time jobs, they learn about their wage versus their “take-home” pay. It’s also a good time to teach them about the value of saving up for a short-term goal, like a school trip or a car, or a long-term goal like contributing to their post-secondary education fund. Important decisions, like whether they should have a credit card or clothing allowance, can pop up around this time, too. Here’s more on how to educate teens about money.
  • Age 18 and older: At this point, your kids are preparing to enter the real world. Hopefully, they have a good grasp on the value of money and the know-how to responsibly manage a savings account. Now’s the time to talk to them about budgeting, education costs, student debt and more.

How to get kids into the habit of saving

Knowing the value of a dollar helps set kids up for a better relationship with money. Getting them started with their own bank account helps foster that knowledge. Look for a kids’ bank account with low or no fees, since the last thing you want is for fees to eat up their smaller contributions. If you can find an account that pays interest, even better. Plus, it will help them learn about banking and form good habits long before they head off to university. Read more about what to look for in a kids’ bank account.

Strategies for teaching kids about money

A piggy bank used to be the go-to way to teach children the value of saving and the costs of spending. But since fiat currency is becoming an increasingly digital endeavour, teaching methods should adjust to that. We outline six simple strategies for teaching kids about money, including spending, saving, budgeting, tracking spending and earning. It also offers ideas for families who don’t want to use allowances to encourage kids to do household chores—every member should help out! 

What is an RESP?

An RESP is an investment account geared towards saving for a child’s education. It allows investments inside the account to grow and earn money tax-free, meaning that no money is owed to the government based on capital gains, interest nor dividend payments. A major benefit of this account: The government pays you to save by kicking in a grant of up to $7,200 over the life of the plan—and potentially more if your family has a low income. Read more about RESPs.

How to withdraw from an RESP

When it’s time to cover the costs of post-secondary tuition, housing and books, you’ll want to know the steps involved in withdrawing from your family RESP. Regardless of who made the contributions—a parent, grandparent, other family member or family friend—the withdrawals are usually taxed on the student’s income. Typically, a student’s income is much lower than the contributor’s, so the tax amount owed is very low or even $0. That’s the top-level strategy, but there are other planner-approved tips to help you maximize your RESP savings and returns

How to make RESP withdrawals for kids with different educational paths

Parents know that no two kids are the same. One kid may be headed off to culinary school, while another pursues academia, and another goes to an arts college. Different educational paths come with different costs and challenges. Read the advice from a financial planner on how to pay for different types of schooling.

How to help kids save money on student housing costs

The cost of housing can be a big one (it can easily add up to a shocking $50,000 bill over the course of a four-year degree). However, there is a way to turn this financial burden into an opportunity, if you are fortunate enough to do so: Buying a property in the vicinity of your kid’s chosen post-secondary institution. Read how to become their landlord to help you both save money (especially if your kid rents out rooms to their classmates).

How to save money for an education, parents-edition

Financial aid for college and university in Canada

There are many paths to funding your education, aside from your own savings and your parents’ contributions. Get a list of the bursaries, scholarships, grants and provincial loans that may be available to you.

If you need to fund your post-secondary education but don’t have much in the way of savings, you can use student loans to fully or partially cover costs, depending on your approved amount. The provincial government loans, such as the Ontario Student Assistance Program (OSAP), work in conjunction with the federal loans and grants programs to help you pursue the education you want, with a relatively low interest loan. Here is how to apply for loans and grants for Canadian students (and if you’re in Ontario, how to apply for OSAP).

How to save money during school

Even if you have scholarships, other funding or a steady paycheque from part-time work, you may still have a tight budget throughout the academic year. Several strategies can help you save money and take advantage of your student status, including making the most of student discounts and finding cheaper travel and textbook options. Read about money-saving strategies.

The best credit cards for students

If you’re looking to build your credit score while earning school credits (#dadjokes), there’s a selection of no-fee cards with useful perks, like earning cash back on groceries or free tickets at the movies, that can help make student life more fun. We’ve rounded up the best student credit cards in Canada right now.

The best bank accounts for students

When budgets are tight, the last thing you want is to be hit with a $20 monthly fee (that’s two burrito dinners!). These low and no-fee accounts are perfect for students, as they offer useful features like unlimited transactions, and points on essential purchases like gas. Some even include sign-up promotions that offer cold, hard cash. Read our complete list of the best bank accounts in Canada—and the must-know features for each.

Managing your finances: Paying for tuition? Is having a car worth the cost for students? Can you afford to move out on your own?

Paying—and saving—for tuition

School isn’t cheap. Paying your tuition is the first financial goal, and to do that you will need to have a handle on all your finances. Learn how to save money while still in school, and even earn some extra cash. 

Living on your own without adding more debt

And if you’re looking to move away or gain some space, consider these things first: Can you afford to live on your own? Find out how to plan for the expected (and unexpected) expenses with this column on the real costs of moving out

Owning a car as a student

Having the freedom to drive to class, your part-time job(s) and your extracurriculars while at college can be a huge advantage and time-saver—but having a car is also a big expense. To help you decide if the cost is worth it, we calculated the costs of owning a car while in school.

Finally, how to pay tuition and pay off your student loans

If you can’t afford to pay your tuition or student loans right away (it happens!), we’ve outlined other approaches on what to do next—while keeping interest payments low and your credit score intact.

Whether you’ve taken out a Canada Student Loan, a provincial or territorial student loan, a bank loan and/or a line of credit to fund your education, you’ll need to repay that once you’ve finished school. Considering that interest usually starts accumulating once you’ve ended your studies, paying off your loans should be a top priority. We crunched the numbers to figure out the best strategies to pay your tuition and pay off your student loans with the least amount of interest. 

Taking the first steps toward building the financial foundation of your future—by working toward your diploma or degree and fostering a positive relationship with money—can be scary and exciting. We know this is a lot of info, so feel free to bookmark this page and come back to it again and again.