Soaring back-to-school costs are impacting long-term family finances
As Canadian students prepare to head back to class, families are facing rising education costs that are increasingly falling on parents and grandparents.
With youth unemployment now at 14.2%, many young Canadians are struggling to find regular and secure work in what economists have dubbed a “youth-cession.” Slowing wage growth, fewer entry-level jobs, and persistent inflation are making financial independence harder to achieve.
As a result, more students are turning to family for help — and older generations are footing the bill for longer than ever, which can have a negative impact on their own long-term financial goal such as retirement savings.
Bloom Finance’s latest Multigenerational Education Support Report, conducted with Angus Reid, examined the financial toll of this shift on Canadians supporting both education and their own long-term plans.
The survey found that 52% of Canadians have children, and 24% have grandchildren including 57% of parents and 76% of grandparents who currently have children in education programs with 70% paying for school-related costs.
Over half of respondents providing education support are spending up to $5,000 per year, while 16% contribute more than $5,000 annually. This year, 28% expect to spend more than last year, while 45% expect expenses to remain steady.
The report highlights the difficult choices families are making to keep students in school and among those helping financially 46% say the support has impacted other financial obligations and 39% say it has directly affected their ability to save or budget for retirement.
For grandparents, the pressure is even greater with one in three providing financial support and 65% saying it has affected their retirement savings.
“We hear this all the time at Bloom: people want to help their children and grandchildren succeed, but they also want to make sure they’re setting themselves up for a secure and comfortable retirement,” Bloom’s Hasan Nizami notes.
The report suggests that reverse mortgages can offer a solution by enabling Canadians to tap into home equity and free up cash flow without forcing a choice between funding education and protecting retirement.
