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Registered Education Savings Plan (RESP)

As a caring parent, you want your child to enjoy a successful life. Today, that means a post-secondary degree or specialized training is a necessity, not an option..

  • Over the past two decades job growth has been much faster for those with higher skills.
  • Over 1.5 million jobs were created for University and Post-Secondary graduates between 1990 and 1998.
  • Employment among those with high school or less has fallen by 2,000,000 jobs since 1981.
  • For those with higher education, employment has risen by almost 5,000,000 jobs.
  • Currently, two thirds of all new jobs require a Post-Secondary education.

Cost for post-secondary education continues to rise each year. It is estimated that the full cost of a 4-year undergraduate degree from a Canadian University in 2020 could cost over $100,000†.

† Human Resources and Skills Development Canada (HRSDC) estimates that post-secondary education costs will increase by 3.5% year-over-year.

From 1990/1991 to 2005/2006, average undergraduate tuition fees rose 188%. Undergraduate tuition fees between 1990/1991 and 2003/2004 increased at an average annual rate of 8.0%, four times the average rate of inflation.

Canadian Government predictions are conservative, since actual education inflation has been 8.0% per year. Even if we take that average and not the actual historical average we are talking costs as below:

Year of Birth Year of School Entrance Estimated Costof Total Tuitionfor a 4-YearProgram*(At Home) Estimated Cost of Total Tuition and Accommodationfor a 4-Year Program*(Away from Home)
2008 2026 $76,751 $122,926
2007 2025 $72,619 $116,826
2006 2024 $68,709 $111,028
2005 2023 $65,010 $105,519
2004 2022 $61,510 $100,282
2003 2021 $58,199 $95,306
2002 2020 $55,066 $90,576
2001 2019 $52,101 $86,081
2000 2018 $49,296 $81,809
1999 2017 $46,642 $77,750
1998 2016 $44,131 $73,891
1997 2015 $41,755 $70,224
1996 2014 $39,507 $66,740
1995 2013 $37,380 $63,428
Today’s average cost of a 4-Year
program beginning in 2007/2008
$26,820 $46,736
Average cost of a 4-Year
program in 2006/2007 was
$25,375 $44,416

* Based on Statistics Canada figures the increase from 1995/1996 to 2006/2007 in total tuition cost was 5.69% and the increase in the cost of accommodation over the same period was 4.53%.

Planning is the only way to save such large amounts. Government is willing to help as children are the future of this country.

A Registered Education Savings Plan (RESP)* is an education savings plan that has been registered under the Income Tax Act and offers significant advantages to families saving for their child's future education expenses.

RESPs offer tax deferral on the interest earned on your savings over the years. If you were to save outside an RESP, your interest earnings would be subject to tax, greatly decreasing the money available for your child’s education. When you save in an RESP, your contributions and your CESG enjoy compound growth that is tax-sheltered.

When the time comes to withdraw funds from your plan, the money is paid in your child’s name to reduce taxes. Since students have generally low income levels, little or no tax is payable.

A nominated child can be eligible for government grants up to $9,200.

resp investment calculator resp grant contact

(*) Only available through prospectus.

Amount of CESG your child can get:

The CESG(Canadian Education Savings Grants) is a government grant that adds up to 20% (or $500) of your contribution into a Registered Education Savings Plan (RESP) per child annually, to a lifetime maximum of $7,200 or when the child turns 17 years old, whichever comes first.

Since unused contribution room is carried forward, it is possible to obtain a maximum of $1000 CESG in a year.

The Enhanced Canada Education Savings Grant is available to families with a net income of $35,595* or less (2005.) These families are eligible to receive up to $100 more CESG yearly for each of their children. The Government will add up to 20% ($100) of enhanced CESG on the first $500 contributed yearly by a family to an RESP.

Families with a net income between $35,595 and $71,190* (2005.) are eligible to receive an additional 10% enhanced CESG, on the first $500 yearly (above the regular 20% CESG). This provides up to $50 more for each child's RESP. Income eligibility for enhanced grants is index adjusted every year.

The enhancements have no carry forward provision. The grant itself is not counted in calculating the annual and lifetime RESP contribution limits.

(*) The income eligibility levels are indexed annually for enhanced grants..

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