If you or someone you know has kids who still qualify to receive the Canada Child Benefits, here’s a way to fund their university education for practically free.
The high cost of getting a post-secondary education in Canada is getting steeper with tuition and fees expected to triple in 2017 as compared to the 1990’s. Fees are expected to climb to an average of $7,437 in 2016-17 according to a study done by the Canadian Centre for Policy Alternatives. This is expected to continue to rise and the best way to make sure of your children’s education is to start their funding as soon as possible. The good news is, it could be done for free … using only their child benefits from the government coupled with the Canada Education Savings Grant (CESG).
Here’s how it works: Say you invest $150 per month from a child’s benefit to a Registered Education Savings Plan (RESP). If you do this for 6 years you would have invested a total of $10,800. The government through the CESG puts in 20 cents for every dollar you put into the plan for an equivalent of $2,160. If after 6 years you decide to stop contributions and just let that money work for you, by the time your child goes to university (assuming a 5% yearly return), you would have an education fund amounting to around $27,000 – at practically no cost to you. This would even be higher if you continue to put in money for more than the example above. Results will differ depending on your child’s age and amount of contribution.
Email us if you want to see how this strategy will work in your particular situation.