Universitas Trust Funds
Universitas was founded in 1964 by a group of young business people who created a unique program enabling parents to pool their savings to accumulate funds for the post-secondary education of their children. Universitas is a highly reputable registered education savings plan (RESP) specialist, and has enabled several hundreds of thousands of students to fund their post-secondary education. The not-for-profit structure of the organization allows it to concentrate all efforts on providing students with the highest possible educational assistance payments (EAPs).
Headquartered in Quebec City, the fund has 100 employees in its head office, and a sales force of 200 representatives, mainly in Quebec and some in New Brunswick. Universitas’ assets reach over $950 million, and over the years the fund paid out over $500 million in its EAPs (Educational Assistance Payments). Currently, the fund has more than 208,000 beneficiaries, and 195,000 subscribers.
The Canadian Business Journal spoke with Gaston Roy, President and CEO, and Isabelle Grenier, Vice President of Corporate Affairs and Human Resources.
While Roy started with the company only a year ago, he is pressing on with the important message that Universitas wants to share with Canadians. The message relates to the holistic effect that is brought on the individual through education.
“I believe education is the foundation for human flourishing within any society,” starts Roy. “The role of Universitas is to be an instrument in breaking the cycle of poverty through post-secondary education, a pursuit which leads to higher earning potential, better health and improved overall outlook on life. Since I started here, my purpose has been to use my skill and experience as a manager to make a difference in society in terms of educational attainment. This has been my personal goal.”
The Universitas Difference
What is unique about Universitas, is that the fund offers both individual plans, such as those found in banks and financial institutions, but also offers group plans. The group plan makes it easier for subscribers to be more disciplined about their savings. People can choose to save as little as $11.25 per month but it provides a discipline in savings.
However, the major strength of group plans resides in the fact that the subscribers pool their savings. This allows for a greater investment capacity for maximizing the EAPs for the beneficiary. Simply put, by pooling in a group plan, subscribers achieve major economies of scale which reduces the costs associated with investment management. This enables the reinvestment of surpluses in the EAP account.
As a not-for-profit structure, Universitas is able to offer its beneficiaries with better payout during their studies, and offers an in-depth knowledge of government grants, which are proven to be a complicated proposition at times, because these grants are generally program-specific, with specific features and exceptions.
“We have the expertise to manage this kind of grant application as part of our support to our customers. When our representatives speak to a customer, we can advise and explain very fairly what program and grant and all the features of the grants. Financial institutions wouldn’t have the expertise to provide this,” says Roy.
“For example,” adds Isabelle Grenier, “There are some grants that are given both by the federal government and some provincial governments, for instance Quebec and Saskatchewan. The grants in Quebec equal to 60 per cent [based on net family income]. Altogether, the savings can be increased to up to $12,800 per child. Also, with the RESPs you have the possibility for the beneficiary to pursue an education anywhere around the world. That is unique to RESPs as an investment vehicle.”
Roy sees two major industry challenges for the fund. No. 1 challenge is the fact that over the past 5 years, the fund saw significant competition increase from the side of the financial institutions such as banks and insurance companies making their way into this financial space. This is where the fund’s expertise in regard to grants and the not-for-profit structure give the upper hand with customers, as well as the group plan solution that characterizes Universitas.
“The No. 2 challenge is more complex,” says Roy. “It’s a new reality with young people. Our customer profiles range around 25 to 35 years of age. This is the young ‘mobile’ customer, and we have to overcome difficulties to reach them via Internet and social media. We have to be very creative in ways of reaching this demographic.”
To address this, Universitas will be introducing a new technology platform in 2014 however, the details of this remain a well-kept secret, and all Roy could share is the fact that the new platform will have great competitive scope, and a truly creative solution to reach the mobile demographics.
Universitas aims at three lines of growth. In terms of the internal growth, the company’s assets grew by more than 50 per cent, and this growth is expected to continue by organic means, but the fund is also opened to partnerships with other industry players.
Indeed, we are currently seeking new partnerships as a means to achieve faster growth. This is a key element as the organization’s client base comprises not only young customers between 25 to 35 years, but also a number of grandparents who are eager to contribute funds for their grandchild’s education. Therefore, we focus a great deal of efforts on reaching out to this market and serving as a tool in bringing more educational funds to the family ecosystem.
Social Commitments and Partnerships
Universitas steps beyond the financial aspect of its mandate when it comes to education. The fund created partnerships with organizations that also focus on children’s future and academic success.
Educaide is Universitas’ official charity that provides educational assistance to students from less privileged backgrounds, enabling them to complete their high school education and pursue post-secondary studies. The fund awards scholarships worth $500 to help children stay the course of knowledge and achievement.
“It’s interesting that 85 per cent of Educaide scholarship recipients earn a first diploma. This is significantly higher compared to the rate of most schools in less-privileged backgrounds — this is how we measure success for Educaide,” says Grenier.
Educaide also provides financial support to prevent high school dropout, and assist students to persevere and undertake a post-secondary education with confidence. Since 2002, Educaide has awarded $950,000 in Perseverance Scholarships and helped over 680 students.
Universitas also created a partnership with Quebec’s Allô prof, a charitable organization that supports academic perseverance with a mission is to provide free schoolwork assistance to all students and their parents. Thanks to this partnership, Universitas is able to achieve another important objective stemming from its mission: to favour school success, starting as early as elementary school.
The long-standing partnership with Forces AVENIR, strives to promote the commitment of youth to projects that enrich knowledge, stimulate the desire to succeed, motivate personal achievement, and encourage the development of civic responsibility, thus contributing to a society of well-informed, active and responsible citizens.
“We are committed to promoting the importance of education. It has been shown that education leads to better health, higher wages, higher income taxes and reduced reliance on government aid. According to StatCan, 74 per cent of children benefiting from an RESP eventually attend post-secondary education; this compares to 47 per cent for children without an RESP. Therefore, the following conclusion can be drawn for a child benefiting from an RESP: his or her chance of attending post-secondary studies is increased by 57 per cent. This is really significant. Simply put, contributing funds to an RESP for a family member means that he or she will have better chances of attending post-secondary studies,” concluded Roy.
With Universitas, Canadians can start saving for education with as low as 38 cents per day, and sooner the start the better, because while the total cost of education (two years at college, or three years at university, including housing) in 2013 was $ 95,000, this number will reach staggering $154,000 by 2030, so Canadians should calculate their savings, and save with RESP expert — Universitas Trust Funds.