Talbot Boggs:Educational financial tips to help out your child

As the New Year begins,

As the New Year begins, now might be a good time to think about or revisit your plans to save for your children’s education, be it college or a university degree.

It’s a well-known fact that post-secondary education is a costly endeavour in this country. According to Statistics Canada, a post-secondary education can cost between $50,000 and $100,000 for a four-year degree program. That cost is expected to rise to more than $140,000 by the time a child born now is old enough to enrol.

Yet in spite of the costs, only half of Canadian parents are using a Registered Education Savings Plan (RESP) to save for their children’s education and only a third are taking full advantage of available government grants.

“Parents need to make saving for their children’s education a priority by budgeting for it as well as taking advantage of the RESP, Ontario Student Aid Program (OSAP), scholarships, bursaries and other programs and opportunities,” says Peter Skoretz, a financial adviser with Edward Jones in Burlington, Ont.

A total of up to $50,000 can be contributed into an RESP for each child named who is enrolled in qualified educational programs. There is no annual contribution limit and the government will add a grant of up to a maximum of $7,200.

Income and capital gains can be generated and grow within an RESP through investments such as stocks, bonds, mutual funds, and guaranteed investment certificates until the children are ready to pay for their post-secondary education. They only pay income tax on the gains earned by the plan and the grants as funds are withdrawn, which usually is low because the income of most post-secondary students is very limited.

“This is a fantastic program because you can get a grant and also grow the money,” says Skoretz. “If the child is younger you can be more aggressive with the investments than if the child is older, say a teenager, because you have a longer time horizon for the money. In either case we recommend parents take advantage of this plan.”

OSAP is a provincial funding program for students attending college and university education. The primary component of the program consists of loans but it does also contain bursaries, scholarships and/or grants which do not have to be paid back.

There are other ways to help mitigate the high cost of a post-secondary education.

“Individual schools and programs often will offer bursaries and scholarships,” Skoretz says. “You often have to apply for these in advance but it’s a good idea to check and see what’s available and what your child might qualify for.”

Of course, students can help out by putting money from summer jobs towards their education and even take on part-time jobs during the school year to help out.

Many technical and trade schools offer co-op programs where students work to complement their studies.

And then there are basic budgeting and money management measures such as preparing a budget for your child and avoiding the use of credit cards. If your student child does have a credit, ensure that it has a small limit and the balance is paid off each month to avoid building up debt.

“Many students are living on their own for the first time and may have a tendency to let loose a bit and have a fast time,” says Skoretz. “Parents need to coach their kids on how to prepare a budget, stick to it and manage their money wisely.”

Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors.

Just Posted

Unemployment rate and EI beneficiaries down in Central Alberta

The unemployment rate for Red Deer region and the number of people… Continue reading

Insurers say Canadian weather getting hotter, wetter and weirder

Average number of days with heavy rain or snow across Canada has been outside norm since spring 2013

Women’s marches underway in Canadian cities, a year after Trump inauguration

Women are gathering in dozens of communities across the country today to… Continue reading

Red Deer councillor balks at city getting stuck with more funding responsibilities

Volunteer Central seeks municipal funding after being cut off by government

WATCH news on the go: Replay Red Deer Jan. 21

Watch news highlights from Red Deer and Central Alberta

Two Canadians, two Americans abducted in Nigeria are freed

Kidnapping for ransom is common in Nigeria, especially on the Kaduna to Abuja highway

WATCH news on the go: Replay Red Deer Jan. 21

Watch news highlights from Red Deer and Central Alberta

Liberals quietly tap experts to write new paternity leave rules

Ideas include creating an entirely new leave benefit similar to one that exists in Quebec

Insurers say Canadian weather getting hotter, wetter and weirder

Average number of days with heavy rain or snow across Canada has been outside norm since spring 2013

Are you ready for some wrestling? WWE’s ‘Raw’ marks 25 years

WWE flagship show is set to mark its 25th anniversary on Monday

VIDEO: Thousands join women’s march events across B.C.

Today marks one year since the first Women’s March on Washington

In photos: Get ready for Western Canadian Championships

Haywood NorAm Western Canadian Championships and Peavey Mart Alberta Cup 5/6 start… Continue reading

WATCH: Red Deer city council debates cost-savings versus quality of life

Majority of councillors decide certain services are worth preserving

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month