Registered Education Savings Plans
Every parent has a dream to impart good post secondary education to his or her child. Knowledge always pays and it is a key to success. With rising cost of education and lack of Government support, it is increasingly becoming a tough task for child and parents to raise funds for higher education.
Registered Education Savings plan is a right answer to above raised question. The parents or Grand Parents or custodian or care taker of child can open this account and can save up to 50,000 dollars with Government of Canada contributing $ 7,200 as Canada Education Savings Grant and for low income families another $ 2,000 as Canada Learning Bond.
The importance of having a RESP in Canada is that it allows availing the benefits of Canada Education Savings Grant under which Government also makes contribution 20% (and more based on net family income, but the max $ 72,00) percent of your contribution to RESP. For every $100 put in by you, Government will contribute $20. The rate of contribution by Government under CESG increases to 40 percent for families with lower income.
This is all done to boost the Parents by motivating them to start contributing into RESP when child is just born and to increase the literacy rate.
Apart from CESG, under CLB (Canada Learning Bond) families with income of lower than $38,000 are eligible to receive grant of $500 as a principal amount for starting RESP plus $100 for every year in which the family income remains lower than $38,000.
Other benefits that you will receive along with RESP are Basic and Additional Education Savings Grant, Alberta Centennial Education Savings Grant and Eligibility Information.
With rising cost of education, it has become important to start a RESP. It has been projected that 16 from now, in 2028 4-year Post secondary education will cost around $100,000. So if you invest in RESP today, you will be able to manage that much of amount for your child.