CST’s RESPs Help To Plan For Your Child’s Education Costs
Putting money aside so that your children will be able to get a post-secondary education is important. It’s so important, in fact, that a global study by HSBC found that 54 percent of Canadian parents would go into debt to fund their children’s post-secondary schooling; more broadly, nearly 50 percent of parents prioritize education savings over their own retirement savings. What is perhaps more alarming is the fact that two in five students in Canada say they have no savings for education and, a point that will be outlined in more detail, two-thirds of students don’t have a Registered Education Savings Plan (RESP) – as highlighted in a Globe and Mail article on the cost of post-secondary education published in 2017.
“Since the 1990s, university tuition costs have risen at about three times the rate of inflation, and the high costs make the dream of post-secondary schooling difficult to realize, if not unattainable if families haven’t put enough money aside,” explained Peter Lewis, VP Canadian Scholarship Trust Foundation, one of Canada’s leading and oldest RESP experts.
The issue is how to pay for your child’s education. A report by Maclean’s found that half the nation’s students are in debt and nearly two-thirds of them say they have no RESP to help out.
A lot of people wonder where we’re going from here. Kyle Prevost, an educator and personal finance blogger, reflects: “It has never been more popular (and many would say “essential”) to pursue further schooling after high school in Canada.”
“However, it is interesting to consider just how we got where we are today, and to note that we might be putting ourselves in some pretty dire straits if we don’t plan for the future,” he adds.
Providing an advantage that many parents in other countries don’t have, an RESP is a savings account that encourages families to put money aside to grow, tax-free, for a child’s post-secondary education. The federal government and some provincial governments add to the account through generous grant programs, if certain conditions are met.
Annie Kvick, a certified money coach in Vancouver, tells Maclean’s that it’s smart to open one early and even when money is tight, family members and good friends can be encouraged to swap in a contribution versus buying their child a new toy for their birthday “It’s a good cause, as opposed to just buying toys and more clothes for the child,” says Kvick. “Grandparents especially love to have this option available to them.”
While you can start an RESP account at any bank or brokerage firm, CST suggests you carefully review the options available to you.
“It’s hard to think about university when your child is just an infant,” Mr. Lewis adds. “But they grow up fast – and you’d be surprised at how much the account grows, too, putting your family in a much better position to help finance that expensive education.”
Canadian Scholarship Trust Plan is only sold by Prospectus. Please see the Prospectus for more detailed information. Copies may be obtained from www.cst.org or by calling 1.877.333.RESP (7377).