RESPs can help cover rising costs of tuition, wealth advisor says
BNN Bloomberg
Parents can use a Registered Education Savings Plan to pay for their children’s post-secondary education while growing their savings tax deferred as tuition costs continue to rise, a financial advisor says.
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“The cost of higher education has been going up higher than inflation over the last few decades,” Tina Tehranchian, senior wealth advisor for CI Assante Wealth Management Ltd. told BNN Bloomberg in an interview. “This will add to the stress, definitely for parents, which makes it more imperative that they use RESPs as a tool to help them save for their children’s education.”
An RESP is a tax-deferred account intended to pay for post-secondary studies, including trade schools, colleges, universities and apprenticeship programs. Parents can contribute a maximum of $50,000 per child. The plan can extend to grandchildren.
Tehranchian says parents can contribute $2,500 and the federal government will pay $500 each year through the Canada Education Savings Grant (CESG).
“The maximum grant that each child is entitled to over the lifetime is $7,200 so it would be best to start as soon as the children are born,” says Tehranchian.
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Parents can use a Registered Education Savings Plan to pay for their children’s post-secondary education while growing their savings tax deferred as tuition costs continue to rise, a financial advisor says.
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