Government Grants Can Help Finance Your Child’s Post-Secondary Education
Did you know that you could open a dedicated savings account to put money aside towards your child’s education? Registered Education Savings plans are offered by most financial institutions and allow you to make regular contributions that can be withdrawn by your child once they start attending college.
This is an interesting way to save up for your child’s education since the Canadian government will also make contributions to the savings plan. Once you open an RESP to save up for your child’s education, you have the possibility to apply for grants via the financial education where you opened up the savings plan.
Saving up with an RESP means that you can contribute up to $2,500 a year towards your child’s education fund. If you qualify for a grant, the Canadian government will contribute the first $500 of this yearly amount. This means that the Canadian government could end up covering 20% of your child’s college tuition if you qualify for the grant over the years.
If you qualify as a low income family, you will be eligible for additional contributions. You can apply for the Canada Learning Bond and will receive $500 from the government when you open the RESP. You will then receive an additional $100 in government contributions for as long as your child remains eligible for this bond.
There are additional programs offered by provinces. If you live in Alberta, Saskatchewan or Quebec, you might be able to receive additional contributions from these provinces. The amount depends on where you live and on which program you qualify for.
Opening an RESP is very easy and saving up for your child’s college education will be made more affordable thanks to the different grants you might qualify for. You should contact your financial institution to learn more about these savings plans and about the different grants or bonds you might qualify for.
The contributions are made after paying taxes but the growth of the savings plan will be taxed to the beneficiary of the plan. This means they will be taxed at a much lower rate and your child might actually not have to pay any taxes on what they withdraw from the plan if they have enough education credits.
Government grants and bonds will help you save up for your child’s education and tax advantages will help make your child’s education more affordable. You should consider opening an RESP if you do not already have one!