September 19, 2003  
Volume 97, Issue 13  

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Investing in education

By Laura Katsirdakis
Gazette Staff

Rising tuition can burn quite the hole in a student's pocket (or that of their parents). A Registered Education Savings Plan may be an effective way of saving up for post-secondary education.

The federal government offers benefits to those who save money for post-secondary tuition through the RESP. "This is a one time guarantee allowing savings to accumulate tax free," said Chris Cahill, a certified financial planner and president of Financial Strategies Group. Those who save for tuition with the RESP also receive a grant of 20 per cent of their contributions on up to $2,000 a year, he added.

The maximum that can be put into an RESP is $4,000 per year and $42,000 total for each beneficiary, Cahill said, adding a parent, relative or other supporter of a potential post-secondary student can put money into RESPs for as many children as they would like.

While there is not an unusually high number of people rushing to take out RESPs, Cahill noted only half of the population makes use of the more well-known Registered Retirement Savings Plan.

"In theory this is a way of combating higher tuition but in reality it only helps wealthy families," said Dave Ford, VP-education for the University Students' Council. This form of financial assistance fails to help those hardest hit by tuition increases, he added.

"This shouldn't be considered a method for offsetting tuition," Ford said. Lower income families suffer most from rises in tuition and they are the ones who have difficulty establishing savings plans 15 or 20 years in advance, he explained.

"Why not take [the money invested by the government in RESPs] and put it in a grant for students when they come to university?" Ford asked. "The issue is not that people aren't saving [for tuition], it's that tuition is too high."

"This is another example of the cost of education, when you have to save literally from birth," said Adam Spence, executive director of the Ontario Undergraduate Students' Association. Many people have debt to deal with when starting a family, he explained, adding the average debt when a student graduates is $22,700.



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