Week 14: Finding Money for Education
MONEY SMART CHALLENGE
Money Smart Weekly Conversation Fact: 29% of Canadians with children under the age of 18 are not using a Registered Education Savings Plan (RESP) to save for their children’s post-secondary education.
How to Find Money for Education – For Adults and Kids From www.mymoneycoach.ca
Post secondary education can be expensive, but the good news is that you don’t need to pay for it all up front. By doing your homework ahead of time you can plan how best to fund your own or your children’s secondary education. In Canada, we have many great options for funding student’s education. There are Registered Education Savings Plans (RESPs) for children, free Government money to fund RESPs, RRSP LifeLong Learning Plans for adults and scholarships and bursaries for students.
Saving for Your Child’s Education – Start Early, Sign Up for a Registered Education Savings Plan (RESP)
The earlier you start saving for your child’s education the more money you will have to provide your child with more options. In Canada, our Provincial and Federal Governments strongly support education, and they make it easy to start saving for your child’s education as soon as your child is born.
If you have more than one child, it is usually best to open a family RESP rather than separate RESPs for each of your children. The advantage of a family RESP is that you can save all of your children’s education money in one account, but the government will still separately recognize your children so you still get all of the same bonuses that you would get if your children had individual plans. Family plans have the added advantage of allowing you to allocate different amounts to your children’s educations if one child doesn’t need as much money as another. So if one of your children decides not to pursue post secondary education or only attends a bit of college, you can use most or all of the money in the family RESP for your child that does continue his or her education. Family RESP plans provide great flexibility. To learn more about RESPs or to set one up, talk to your financial adviser, bank or credit union.
Free Money: Canada Education Savings Grant (CESG)
If you contribute to an RESP for your child, even more free money is available from the government. To encourage parents to save for their children’s education, the government will match 20% of the money a parent saves in their child’s RESP each year to a maximum of $500 per year for each child. So if a parent puts $600 into their child’s RESP, the government will contribute $120 (the government is matching 20% of $600), and if a parent contributes $2,500 to their child’s RESP, then the government will contribute $500 (again 20% of $2,500). You can do this every year until your child turns 18. This is a great way to get another $500 of your taxes back every year if you happen to have $2,500 to put toward your child’s education.
More Free Money: Canada Learning Bond
If your child was born after December 31, 2003 and your family’s net income is less than $35,595, the government will deposit $500 into your child’s RESP. All you have to do is open an RESP for your child and apply for the Canada Learning Bond. Most RESP providers will apply for the grant on your behalf if you ask them to. After your child receives the $500, the government will continue to deposit $100 per year into your child’s RESP for as long as you qualify. If you qualify for this program, take advantage of it. It’s a gift. Click here to learn more about the Canada Learning Bond.
Paying for Your Education
As an adult, if you would like to continue your education or train for a new job, the government will allow you to withdraw money from your RRSP to pay for your education. You can also use this money to finance your spouse or common-law partner’s education or training. You or your spouse can take advantage of this program as long as you are going to school full time. You can withdraw up to $10,000 per year to a maximum of $20,000, and they give you 10 years to pay the money back into your RRSP.
Paying for a Student’s Education through Scholarships and Bursaries
To maximize the money you are saving for your child’s future, encourage your child to get good grades. Good grades can be more important than most people think. They can subsidize your child’s education. Good grades can enable a student to pay for much of his or her education with scholarships and bursaries. Encouraging your child to pursue scholarships and bursaries can save you a lot of money. It is an especially good strategy if you are not able to save very much for your child’s education.
Some people think that only the most exceptionally talented students can get scholarships. This idea is completely false. There are numerous scholarships and bursaries available. Many of these scholarships have specific criteria that make sure that normal kids get the money. In many communities, scholarship money is awarded to deserving high school students by various organizations, business, individuals, and governments. In addition to this, numerous scholarships are also available for college and university students. At times, only a small number of students take the time to apply for many of these scholarships. Many scholarships are much easier to win than most people think. They are a great way to fund an education and save you money.
To get an idea of what kind of scholarships might be available for your child, check out Scholarships for High School Students from Alberta
Paying for Education through Student Aid Alberta; Canada Student Loans and Alberta Student Loans
To receive Student Aid, you must meet all of these basic eligibility criteria:
be a Canadian citizen, permanent resident or have protected person status under Canada’s Immigration and Refugee Protection Act. Students with a study permit are not eligible.
be a resident of Alberta
be enrolled as a full-time student taking a minimum 60% of a full course load (40% of a full course load if you are a student with a permanent disability)
be enrolled in an eligible program at an approved post-secondary school
have financial need
maintain academic progress
Other factors may also affect your eligibility, including: your credit rating if you are a first time applicant, 22 years or older; previous student loans in default; declaring bankruptcy while repaying student loans
Click on this link to find out more about Loans and Grants for Part time Students and Parents with Dependants.