The Canadian (Pipe?) Dream

Sep 12, 2019 | Adam Bosak


In this land, there are few limits to what you can achieve – that’s the Canadian Dream. At least, that’s what it was before mounting student debt and delayed life goals turned it into more of a pipe dream for many young Canadians. Fortunately, education planning can help.

In the past, the “life script” generally went like this: graduate, get a job, buy a house, start a family. But with 67%1 of new post-secondary graduates now entering the workforce burdened with debt, these important life events are being delayed.

However, if they desire a higher income to help achieve their Canadian Dream, young Canadians need an university education, even if that means delaying important life goals. According to a Statistics Canada study2 that followed a group of Canadian youth from the early 1990s, women with a bachelor’s degree earned $442,000 more in average cumulative earnings through their thirties and forties as compared to women with a high school diploma. For men, the difference was $700,000.

Keeping the dream alive

Family has a key role to play in helping young Canadians afford the $19,498.75 average annual cost of one full-year of study3. And, fortunately, there are several strategies to help families fund education costs for younger family members. The key is to start early.

Registered Education Savings Plans (RESPs)

An RESP is a tax-deferred savings plan designed to allow you (the subscriber or contributor) to save for a beneficiary’s post-secondary education. All the interest, dividends, capital gains and government incentives in the plan grow on a tax-deferred basis. Also, the federal government matches a portion of your contributions. No matter what your family income, the government pays a basic Canada Education Savings Grant (CESG) of 20% on the first $2,500 of annual contributions to a maximum annual CESG of $500 for each beneficiary. The lifetime limit is $7,200 per beneficiary.

Living trusts

A living trust (or inter-vivos trust) can be created during your lifetime and can be a powerful tool, depending on your circumstances, as it can allow you to dictate how much you give, to whom, and for what. For example, say you want to financially support grandchildren’s post-secondary costs to alleviate the burden of debt post-graduation. You can set up a living trust with the terms drawn up according to your wishes, which may be that the assets are to be used exclusively for funding educational pursuits. When your grandchildren receive their grants, any capital appreciation or other income earned in the trust will be taxed in their hands, which presumably would be at a much lower tax bracket.

To learn more, please contact us today.


1Ipsos (for BDO and RBC Economic Research), Three in Four (77%) Canadian Graduates Under 40 Regret Taking on Student Debt (September 2017).

2Statistics Canada and RBC Economics, The Cost of Credentials (June 2018).

3Maclean’s, The cost of a Canadian university education in six charts (April, 2018).