For people who have kids in their final years of high school or those just starting post-secondary, this time of year can be stressful when you think about all those financial obligations ahead of you. It’s not cheap. Here’s Tyler Saito with a look at some of the best ways to make sure you can afford your child’s post-secondary education.
What is an RESP?
The RESP is a Registered Education Savings Plan, and it’s a government program designed to encourage saving for kids’ post-secondary education. The great part about it is interest from the RESP and investments are all tax deferred until the money is used for education. And anyone can open up an RESP for a child including parents, grandparents, and even other relatives and friends. You do need social insurance cards and the child’s information, and you do need one of the parents/guardians to sign off on it.
What are the benefits of an RESP?
There’s a couple big benefits–I think the biggest benefit is the government grants. There are two different grants, one is a federal grant and the other is a BC grant. The second big benefit, of course, is the tax free element. So if your child is young and you have up to 18 years until they get to post-secondary, that’s a fair amount of tax-deferred income that you can collect in that timeline.
What are the two grants related to RESPs? Where can parents learn about them?
There is information on the Government of Canada website that go into specifics of the government grants. The two big ones are the Canadian Grant [the Canada Education Savings Grant “CESG“], which gives you up to 20% of your contribution, up to a maximum of $500 per year. The second one is the BC Grant [BC Training and Education Savings Grant “BCTESG“] and with the BC Grant your children have to be between the ages of 6 and 9 when you have the RESP open, and the BC Government will give you $1,200 directly into your grant.
If parents haven’t done this yet, what’s the best way to get started?
Head into your financial institution, have your child’s birth certificate and their social insurance number, get [an RESP] opened up. Even small amounts can grow significantly over the timeline before they go into post-secondary so get it going as soon as you possibly can.