Intro to Education Savings
Posted 06 Jun 2014 by Rick Irwin, CFP, CLU
For many years, University tuition has been rising at a rate much higher than the core inflation rate yet in this increasingly knowledge -based economy, post secondary education is more valuable than ever. It's estimated that by 2019, the total cost of a four-year university education will be $74,000 and a three-year college education will total $45,000. (Source: Statistics Canada and the Association of Universities and Colleges of Canada, 2001)
The most common savings strategy for Canadian parents is the Registered Education Savings Plan, or RESP, which provides tax-deferred growth. In addition, each beneficiary is eligible for the Canada Education Savings Grant (CESG). The federal government provides a 20, 30, or 40 % grant (dependant on family net income) on the first $500 contributed, and a 20% grant on the next $2,000 contributed annually to a lifetime maximum of $7,200. The grant is invested directly into the beneficiarys RESP. But there are restrictions to RESPs and you should sit down with a qualified professional to discuss the pros and cons before beginning a savings plan.
Discover how much your money can grow in an RESP with the added contributions from the Canadian Education Savings Grant. This tool, from Dynamic Funds, also helps you figure out how much you will need to save for your children's education.