With post-secondary education costs continually rising, the idea of paying for an education can seem daunting, but we can help.
Post-secondary education can be expensive. However, you don't need to pay for it all at once. By creating a plan ahead of time you'll be well prepared for the day your son or daughter heads off to college or university. The earlier you start saving, the more money you'll have. In Canada, our provincial and federal governments support education, and they make it easy to start saving as soon as your child is born.
Here are five strategies to consider as you plan:
- Consider setting up an automatic payment plan - You can set up an automatic payment plan which systematically withdraws funds from an account to make contributions. Contributions can be as low as $25/month.
- Take advantage of the Canada Education Savings Grant (CESG) - When you contribute to an RESP, the Government will contribute 20% on every dollar of the first $2,500 you save in your child's RESP each year (higher rates available for lower net income earners) up to a maximum of $500/year and $7,200/lifetime. There is the ability to 'catch up' in future years dependent on available grant room. The CESG is available up until the end of the calendar year in which the child turns 17. Over the life of the RESP the CESG can add up to a significant amount to assist parents in funding their child's education.
- Find out if your family qualifies for the Canada Learning Bond (CLB) - The CLB can also provide low income families, whose children were born on or after January 1, 2004, an additional $500 lump sum, plus an additional $100 per year until the child turns 15 years old, for a lifetime maximum of $2,000. Through the Canada Learning Bond, the Government will add money to the RESP for an eligible child every year, even if you do not add any money. Applying for and receiving the Canada Learning Bond will not affect any other benefits that you or an eligible child receives.
- Consider opening up a family plan - An RESP can be opened as a family or an individual plan. An individual plan is designed for a single beneficiary. In contrast, a family plan is set up for multiple beneficiaries. Contributions to the RESP plan are tracked on a per-beneficiary basis, however, if one beneficiary does not attend post-secondary or does not use all of the funds allocated, the remaining funds can be used by the other beneficiaries (CESG is limited to $7200 per child/CLB must be used by the child that received the Bond).
- Explore financial assistance options - A good place to start is the Government of Canada's Resource page where you can explore student loans, grants and scholarship options that might be available to you.
By following some of these saving strategies and contributing to an RESP when your children are young, the investments will have more time to grow and you will be in a better position to support your children's continuing education when the time comes.
We can help
At Edward Jones, we can help you achieve your financial goals. Contact your local Edward Jones financial advisor about a financial strategy that makes sense for you.