But three-quarters of parents with children under 18 haven't made a detailed estimate of the total cost of post-secondary education, said BMO's Wealth Institute in a report released on Wednesday.
Tuition and other costs for a four-year university degree now can cost more than $60,000, the report said.
"I think that for most people if you tell them that tuition has increased two or three times the rate of inflation they will be surprised at that," said BMO's Caroline Dabu.
This can leave parents unprepared for the costs and students with hefty loans to pay back when they graduate, Dabu said from Toronto.
Over the last five years, the average annual inflation rate has been 1.6 per cent while tuition inflation was 3.9 per cent, the bank said.
It also noted that at the beginning of the 1990s, average undergraduate tuition fees in Canada were $1,464 and they've risen more than three-fold to $5,581.
Parents often see college or university as a long way off for their children, said Dabu, vice-president and head of BMO's wealth planning group.
"The top mistake is not starting early enough."
The report also found that 83 per cent of parents expect to pay for their child's college or university costs, with 44 per cent expecting their child will also contribute.
"Let them know you're saving for their education and have them involved in how you're saving," Dabu said.
If students have a part-time job, parents could have a portion of earnings go toward post-secondary education to help them understand budgeting, she added.
Only half of parents have set up a registered education savings plan (RESP), said the inaugural report by the bank's newly created Wealth Institute, called: "Student Tuition and Debt on the Rise: RESP's and Beyond."
The report also found that only 34 per cent of parents were taking full advantage of the available government grant for RESPs.
The BMO report also recommends parents consider using tax free savings accounts, trusts, corporate dividends and life insurance policies to help pay for post-secondary education.
"The advice we give to clients is very similar as to what we give around retirement, and that is to start saving as soon as possible," Dabu said.
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