The cost of post-secondary education is increasing
dramatically while most family incomes are
increasing at a much slower rate or not at
all. Although many children are contributing
to the cost of their own education through
summer jobs and savings, families are finding
it harder and harder to finance their children's
post-secondary education.
Due to the direct relationship between the
level of education a child receives and her
employability and level of income, it is critical
that children still receive post-secondary
education. Children need proper training and
education to secure employment in a world
that is becoming increasingly competitive
and technology driven. This of course means
that it is imperative that parents take the
necessary steps and plan ahead. These steps
include setting educational objectives, analyzing
costs, developing funding strategies, and
implementing and monitoring the plan.
Key Questions to Ask when Developing a
Plan are:
- What are the child's ambitions and goals?
- What are the total costs of achieving
the objectives?
- Which income and savings strategies
can be used?
- What is the time span for implementation?
- Will the plan change or need to be modified
over time?
An education savings plan involves calculating
the additional amount you will need to fund
your education objective. Registered
Education Savings Plans (RESPs) are
government approved plans designed to assist
and encourage families to save for post-secondary
education. Although contributions to an
RESP are not tax deductible, any growth
inside an RESP is tax sheltered.
The federal government introduced the Canada
Education Savings Grant (CESG) in the
1998 budget. This was to encourage Canadians
to use RESPs. The grant is equal to 20%
on the first $2,000 in the annual contributions
to a maximum of $400 per year per beneficiary.
The lifetime maximum is $7,200 (18 years
x $400). The Canada Education Savings Grant
(CESG) can add significant growth to your
RESP.
Cost of a 4 Year Education in 18 Years
| Year |
Current
Costs |
At
4.00% Inflation |
| 1 |
$42,465 |
$44,163 |
| 2 |
$42,465 |
$45,930 |
| 3 |
$42,465 |
$47,767 |
| 4 |
$42,465 |
$49,678 |
| 5 |
$42,465 |
$51,665 |
| 6 |
$42,465 |
$53,731 |
| 7 |
$42,465 |
$55,881 |
| 8 |
$42,465 |
$58,116 |
| 9 |
$42,465 |
$60,440 |
| 10 |
$42,465 |
$62,858 |
| 11 |
$42,465 |
$65,372 |
| 12 |
$42,465 |
$67,987 |
| 13 |
$42,465 |
$70,707 |
| 14 |
$42,465 |
$73,535 |
| 15 |
$42,465 |
$76,476 |
| 16 |
$42,465 |
$79,535 |
| 17 |
$42,465 |
$82,717 |
| 18 |
$42,465 |
$86,026 |
Don't Delay! Start Planning Today!
For additional information, please visit:
www.servicecanada.gc.ca/fr/gdc/reee.shml
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Education