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How to save for post secondary education?
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A post secondary education is one of the best things you can give your child for their future. Studies show a person’s earning power increases with each degree they receive. Rewarding, yes. Affordable, not exactly. Today, a post secondary education can cost tens of thousands of dollars. And it’s on the rise. Undergraduate tuition fees have almost tripled since the early 1990s. In 2004-2005, university tuition fees averaged $4,172, compared with $1,464 in 1990-1991.¹ This does not cover the additional fees over and above the tuition costs.
The earlier the better.
Giving yourself a head start in saving for your child’s education means your money will have more time to grow. And more time for your investments to weather any market ups and downs. Even the government is stepping in to help. Investment options such as the Registered Education Savings Plan (RESP) and government funded Canada Education Savings Grant (CESG) have the potential to provide tax benefits to you – and to bring your child’s future educational goals within their reach.
RESPs
RESPs lets you contribute towards your child’s education and the money grows tax free until your child needs it for tuition, residence and other educational expenses. More information >
CESG
The government of Canada will add to your savings in a RESP with a CESG. The grant provides at least 20 cents for every dollar on the first $2,000 of annual RESP savings made on the child’s behalf to a lifetime limit of $7,200.² Effective 2007, the annual CESG increased $400 to $500 and the $4,000 annual limit on contributions has been eliminated. More information >
It’s never too late.
Like we said, generally speaking, the earlier you start saving for your child’s post secondary education, the better. But that doesn’t mean that if your child is 10 you should just give up. It’s never too late to start planning. And if you’re a proud grandparent, aunt or godparent, you might want to think about making a gift to an account established on the child’s behalf.