There's Help for Parents Trying to Save for Their Children's Education

    TORONTO, Jan. 13 /CNW/ - There is an old saying: "There are lies, damn
lies, and statistics." The implication is that statistics are not necessarily
reliable - and some believe they can be twisted and turned to get them to say
what you want. In some cases, that may well be true. But when it comes to
post-secondary education for our children these days, the statistics are
probably bang on.
    According to Statistics Canada, between 1990 and 2002, over three million
jobs were created that required some form of post-secondary education or
training. During the same period, there was a net loss of over one million
jobs that required a high school education or less. It is estimated that,
today, more than 70% of jobs require some type of post-secondary education.
And that percentage is likely to rise in the future.
    The statistics also tell us that as post-secondary education has become
more important, the costs have also been rising. Again, according to
Statistics Canada, between 1982 and 2002, the costs of post-secondary
education rose by an average of 8.1% a year. Today it can easily cost anywhere
from $20,000 to close to $100,000 to cover the costs of four years of
post-secondary college or university education - depending on whether a
student lives at home or away from home.
    So we face a situation today where post-secondary education and training
is becoming more and more essential; the costs of post-secondary education and
training are rising; and more and more young people are facing a challenging
future - either unable to obtain a post-secondary education, because they
can't afford it, or burdened by high debts they find necessary to be able to
get their education.
    The federal government has two education savings incentives programs to
assist Canadians. One is the Canada Education Savings Grant (CESG). Depending
on your family income, for whatever amount is saved up to $500 in a Registered
Education Savings Plan (RESP), the federal government will add an additional
20%, 30%, or 40% of the amount saved. Then, regardless of your family income,
if you save more than $500 (up to a maximum of $2,500 per year), the federal
government will add 20% of the amount saved to your RESP. Over time, the CESG
could add up to a total of $7,200 in savings - and that does not include the
interest that can be earned.
    The other savings incentive is the Canada Learning Bond (CLB), which is
specifically aimed at helping those families with a modest income. If your
family income is below $37,885, and your child was born after December 31,
2003, and your family receives the National Child Benefit Supplement as part
of the Child Tax Benefit, your child's RESP can receive a $500 start-up
payment - plus an additional $100 a year until your child turns 15 years of
age (as long as you continue to receive the National Child Benefit
Supplement). That means that, over time, the CLB program could provide up to
$2,000 for your child's education, not including the interest that can be
earned. The Alberta Government has also established the Alberta Centennial
Education Savings (ACES) Grant, which will provide additional support to
families and students living in Alberta.
    Therefore, a child who qualifies for the Canada Learning Bond together
with the support from the Canada Education Savings Grant could obtain close to
$10,000 in no-cost federal government support - not including the interest
that can be earned or the additional funds that will be provided by the
Alberta government if you are a resident of that province, are considered
eligible, and apply.
    Perhaps the most important thing is to start your education saving as
early as possible. Consider this example. Suppose you save a loonie and a
toonie each day for 17 years. That would add up to $1,095 a year. If you save
that money in an RESP, you will also receive at least $219 ($1,095 x 20% =
$219) from the CESG (possibly more, depending on your income). If those
savings earn just 3% a year, at the end of 17 years you will have saved almost
$30,000! And that does not include any other funds you may get from the Canada
Learning Bond or Alberta Centennial Education Savings Grant.
    Consider another example. Suppose you decide to give up one $2 coffee a
day from the time your child is born and put that money into your child's RESP
- a total of $730 a year. This would enable you to get a minimum of $146 a
year from the CESG ($730 x 20% = $146) - and possibly more, depending on your
income. If your savings earned just 3% interest, that would add up to almost
$20,000 in total savings over 17 years, again not taking into account any
money from the CLB or ACES.
    It is clear that savings do add up and, in some cases, to quite a lot. If
you would like to learn more and find out about other savings strategies,
visit the Building Futures Network web site at
The Canadian Foundation for Economic Education (CFEE), which is a non-profit,
non-partisan organization, created this site with funding from the Government
of Canada. No one will try to sell you anything at this site. Its only purpose
is to try to assist Canadians with their savings activities - and particularly
with saving for post-secondary education and training. The site provides
saving tips and a great deal of other helpful information along with links to
the Government of Canada's education savings incentives.
    The site also provides access to the Building Futures Planning Guide,
which is available free of charge and designed to help you plan for your
children's post-secondary education and training. You can download and print
the Guide. Soon you will be able to use the on-line, interactive version,
which should be available in February. If you would like more information,
please call CFEE at 1-888-570-7610 or visit our web site at where
you will find an array of useful resources.
    There is no doubt that post-secondary education and training is very
important in helping a child to build a successful future. By tapping in to
the government assistance that is available, starting early, and putting a
savings plan in place, you can do a great deal to help prepare for the future
costs - and help your child better prepare for the opportunities that lie

    By Gary Rabbior,
    President, Canadian Foundation for Economic Education
    ( or

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Ontario, M4R 1A3, Phone: (416) 968-2236, Fax: (416) 968-0488, Website:

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