“In the Greater Toronto Area, The Registered Education Savings Plan (RESP) is an investment that sanctions parents to save their children’s post-secondary educational expenses.”
This article will explore how RESP can ensure and secure the future educational expenses of your child.
With numerous educational institutions in the Greater Toronto Area (GTA), RESP offers tax advantages, Government grants, and various investment and saving options to prepare for the rising costs of higher education and secure a bright future for their children.
The GTA families get in mitigating the higher education and provide a secure financial foundation for their children’s academic careers.
What is the Registered Education Saving Plan (RESP)?
Are you aware that a Financial Investment Plan in the Greater Toronto Area, sponsored by Canadian Government, offers a guaranteed risk-free return of 20% annually?
The GTA is a dynamic metropolitan region encompassing Toronto and its municipality vicinity. It is a home to numerous educational institutions, including world-famous universities, colleges, and vocational alma mater. The significance of planning for a child’s education is a well-recognised by the families of the Greater Toronto Area; furthermore, RESP serves as a valuable tool in achieving educational objectives.
The RESPs in the GTA offer a range of perks and benefits; here, benefactions made by parents, family members, or friends are invested, and the funds grow tax-free ensuring their savings accumulate over time until withdrawn for educational purposes.
The Canadian Government further incentivizes RESP savings through programs like The Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB), adding to the overall growth of the investment.
Numerous financial institutions, banks, and the GTA credit unions offer RESP account. RESP permits parents to choose from Investment options, such as mutual funds, guaranteed investment certificates (GICs), or a combination of both, depending on the risk-bearing and investment objectives.
The key merit of RESPs in the GTA is Flexibility which allows parents to deposit regular amounts or make lump-sum contributions. Scheme imparts depositor the ability and flexibility to save according to their financial condition.
Moreover, RESPs can be transferred and split among siblings, which ensures funds inducted for education can be utilized effectively within the family.
How much Post-Secondary Education cost in the Greater Toronto Area?
In the present day, the cost of education has increased rapidly and has become a significant financial consideration. Additionally, this has highlighted the importance of financial planning and an increase in investment programs like RESPs. As educational costs continue to rise, estimating the potential expenses involved in providing higher education for your children in the coming years is requisite.
The amount of tertiary education program in the Greater Toronto Area varies depending on the institution and program type. The general overview of approximate expenses involved:
- Undergraduate- Tuition fees vary significantly depending upon the institution. For universities, it can range from roughly $6,000 to $18,000 per annum for domestic students, depending on the program they choose. The Graduate Program can range from approximately $10,000 to $25,000 per annually for domestic students. Generally, foreign students’ tutelage fees range from C$ 15,000 to C$ 40,000 annually.
- Colleges: The diploma and certificate program fees cost approximately $2,500 to $5,000 annually. Also, the tuition fees for degree program ranges from $5,000 to $12,000 per annum.
Various factors, such as location, transportation, food, and personal expenses, influence the living expenses in the GTA. The accommodation cost depends upon the student’s location selection, i.e., on-campus or off-campus. The cost of residing on-campus lies from C$ 8,000 to C$ 15,000 per academic term. Off-campus, housing cost varies as per the location. Rent can be grossed around CAD 800 to CAD 2,500 per month depending upon the type of housing, i.e., shared apartment, basement suites, etc.
- Books and Supplies:
On average, the student’s book and other supplies should budget for around CAD 1,000 to CAD 2,000.
- Miscellaneous Expenses- Students in the GTA can expect to spend around $10,000 to $15,000 per annum on living expenses. On average, personal expenses such as food, clothing, entertainment, and other miscellaneous costs will come from CAD 3,000 to CAD 6,000 per year, depending on their lifestyle and choices.
Who bears these Financial Responsibilities for Education Expenses?
The Financial responsibilities are either covered by the parents or the student, who opts to work part-time, take student loans, or accumulate personal debt.
As per the record of Canadian Federation of Students, the average student debts exceed $28,000. As per The Canadian Student Loan Program Statistics, most students require approximately ten years to repay these debts fully. These hefty amounts of debt have abiding implications, such as delayed significant milestones.
Assume the story of Ron, who was a determined young man. He was a bright and ambitious man who always dreamed of achieving higher education. However, he faced a severe dilemma, i.e., who would pay for his education?
Ron decided to look thoroughly into this matter. As he entered the real shark world, his dreams felt burdened and like distant fantasies. Tom went further through his college years; came to know the option of student loans. He realized this could work as a bridge to fill the financial gap. However, after graduating, Tom faced the harsh reality of student loans.
Although his degree gave him a potential job opportunity, a large section of his earnings went towards repaying the debts. Later, he realized the scenario where the current system had placed a heavy burden on him, making it challenging to pursue education and plan a stable future.
Fig: New Beneficiaries
Setting Up your RESP?
- Individual Plan- An Individual RESP designed to benefit a single beneficiary, typically one child.
- Family Plan- It permits the account holder to name multiple beneficiaries, usually siblings or immediate family members.
- Group Plan- Enables multiple subscribers to contribute to a shared investment pool managed by a group plan provider.