My Zeo

  • Home
  • About
  • Blog
  • Lifestyle
  • Health
  • House
  • Pets
  • Fitness
  • Money
  • Contact

Saving For College or University – 3 Savings Plans To Consider

June 1, 2019

Many parents view the act of opening a savings account for long-term college savings as a good move. Once upon a time, it was. However, times have changed and a regular savings account just doesn’t cut it anymore. Unfortunately for some parents, they come to this realization much later on and regret the many benefits they missed simply because they chose the wrong savings vehicle.

Saving for college is not like saving for a car or a vacation whereby the costs associated tend to remain more or less the same. College is different in that the fees are constantly rising year by year – and by significant margins too. In many countries, the rate of college tuition increase has even surpassed that of inflation.

For parents, this means a proper savings vehicle is required that will grow their money overtime at a rate similar to that which college or university fees are increasing at. To assist with this, the Canadian government created Registered Education Savings Plans (RESPs) in 1998 to assist parents save for their children’s higher education.

Unlike a savings account, parents registered with an RESP provider, such as Knowledge First Financial, have access to the education savings grant offered by the Canadian government. Knowledge First Financial is one of Canada’s largest RESP providers and one of the best reviewed RESP provider. This grant is offered to parents in accordance with the amount they deposit into the RESP. The government contributes 20% for every dollar deposited, up to a maximum of $500 a year per child, for a maximum of $7,200. Parents can receive the maximum grant per year by depositing $2,500 in their child’s account.

Parents with low incomes who need even more assistance saving for college can apply for additional Canadian Education Savings Grants (CESG) to further boost their savings. Upon approval, such parents can receive an extra 10 or 20% grant, depending on their situation, for each dollar they contribute. This is on top of the grant offered to all parents.

Low-income families can also benefit from the Canada Learning Bond (CLB) as a result of using an RESP. If such parents have any children born past Jan 1st, 2004 they can apply for a CLB and receive $500 when they first join an RESP and on the following years receive $100 continually for the duration they are deemed eligible.

Apart from these benefits, it’s worth pointing out that all the money contributed to an RESP is tax-deferred. No taxes are imposed until the date of withdrawal provided the amount in the RESP is below $50,000.

Here are three RESP plans available for you to choose from.

1. Individual RESP Plan

An individual RESP plan is intended to pay for the education of one beneficiary. Anyone can open an individual plan and anyone can contribute to it. If the beneficiary doesn’t continue with their education after high school, you may be able to name another beneficiary.

2. Family RESP Plan

A family plan can have more than one beneficiary. But each beneficiary must be:

  • related to the person who opens the plan (for example, your children, grandchildren, brothers and sisters), and
  • under 21 when you name them.

3. Group RESP Plan

Group plans work differently from individual and family plans, and each plan has its own rules. They also tend to have higher fees and more restrictive rules.

You can open a group plan for one child even if he/she is not related to you. You must make a minimum deposit when you open the plan.

It is recommended that you research the Individual or Family Plans further before you decide which one suits you best and we recommend that you stay away from the Group RESP plans as they tend to be more complex and generally more expensive as well.

To read more on topics like this, check out the money category

Leave a Comment · Money

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

About Me

Hello all!!!! I'm Darcy and I recently started writing on My Zeo about health and fitness (and part of that important health equation is sleep!). As we are all super busy with life, I try to integrate how to stay fit, relax and be healthy and happy through everyday life.

Facebook

My Zeo

NEWSLETTER

TeraHemp

Everything You Need to Know About Bedsores

Bedsores are a common yet debilitating affliction that occurs fairly easily. They can affect anyone . . .

Read the Post

5 Things To Add To A Prenup

Getting married is one of the most exciting times of life. Most people get married because they want . . .

Read the Post

10 Effective Video Editing Tools That Businesses Should Leverage

The popularity of videos is constantly rising with every passing day. Video has emerged as an . . .

Read the Post

How Can I Get a Fast Divorce in Alabama

In Alabama, there are several steps you can take to get a fast divorce. These include: Check if . . .

Read the Post

Best places to live in the USA if you are elderly

As people get older, many start thinking about where to retire. For some, that means staying close . . .

Read the Post

Follow Us Online

  • Facebook
  • Instagram
  • LinkedIn

Copyright © 2018 myzeo.com

Copyright © 2023 · Simply Pro by Bloom Blog Shop.