Can you pay for your childs full education with an RESP? - harjinder

Can you pay for your childs full education with an RESP?

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blog image October 13, 2020

Can you pay for your childs full education with an RESP?

Getting a good education is becoming costlier every year. According to Statistics Canada, over a span of a decade (2008-2018), the university tuition fee in Canada has risen over 44% and this is just the average. For programmes such as pharmaceutical, Law and dentistry, the tuition fee has risen more than 144%, 85% and 78% respectively. If you are a new parent, seeing these numbers might make you a bit worried about your child’s future. Well if you start an RESP account you won’t have to. RESP or Registered Education Savings Plan can ensure that your young one/s would get the high-quality education they deserve and the Canadian government would also help you with it. You can get in touch with Harjinder Sandhu, he can give the complete details of the policy and help you with the paperwork as well. Call him and schedule an appointment today!

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What you need to know about RESP?
In simple terms, RESP is an account where you can make monthly deposits of a minimum amount and save for your child’s post-secondary education. There is a limit to the maximum contribution in a year and the government matches a part of your contribution. This is around 20% of your contribution. So, if you are contributing $2,000 in a year, the CESG (Canadian Education Savings Grant) would be contributing around $500 in the account to make up the amount to $2,500. When your child starts higher education, this amount can use to bear the expenses.

So, can an RESP cover the entire cost of your child’s higher education?
Let’s have a look at the math. If you start an RESP account when your child is born, and if a 4-year programme at that time is costing around $8,838, then in 18 years’ time the cost can increase to $83,504.02. This is calculated based on a projection of 4.5% annual fee increase of the course. So, if you are contributing 2,500 every year then you will be able to save up to $100,092.14. Eventually, there will be a surplus amount of around $16,588.12 which would be saved even after all the education costs are paid for (this would include boarding costs too). So, yes, if you contribute in a timely manner in an RESP, then you wouldn’t have to worry about your child’s education costs at all. Take the advantage today, contact Harjinder Sandhu and get started with opening an RESP account.

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