Saving money for college or university – what the statistics are telling us

LIttle Boy and Golden Retriever

More Canadians are saving more money for college than ever before. Maybe it has something to do with the increasing cost of tuition or the stories we hear about students with large debt loads that have parents convinced they need to plan ahead and save for their child’s academic career. Newly released data from HRSDC (Human Resources and Skills Development Canada) shows that roughly 45 per cent of Canadian children had an RESP (Registered Education Savings Plan) set up for them by their parents in 2012. And it’s not just that we’re seeing more families investing in education savings plans but the amount of money we’re investing is also increasing; total contributions increased by $110 million in 2012 from those made the previous year.

RESPs are definitely one of the best investments parents can make for one very good reason; government grants. The federal government actually helps you save more money for college through the Canada Education Savings Grant (CESG). The CESG will pay you 20 per cent on annual contributions of up to $2,500. That’s a total of $500 per child per year in grant money – or $7,200 over 17 years, the length of time you can collect the CESG.

Lower income families can also receive the Canada Learning Bond (CLB) supplement. You may receive this if your family qualifies for a family allowance. The CLB does not require any contributions from parents and is deposited directly into your child’s RESP. It provides an additional $2,000 education grant per child if you qualify for all payments. Despite all of this ‘free’ money, there are still a lot of families who are not applying for this program with the latest HRSDC statistics showing us that only 27.5 per cent of eligible families participated in the CLB in 2012. But there is some good news, the number of new families taking advantage of the program is steadily on the rise increasing by 19 per cent in 2012 from 2011. And it’s not just middle or higher income families increasing their RESP savings, 96.7% of children who have received a CLB also received at least one other contribution to their RESPs showing there are many parents with various income levels who see the value in saving for college.

Edyta McKay