This column focuses on a wide range of issues affecting post-secondary students. Students are encouraged to submit suggestions and educational topics they are concerned about, or personal experiences with courses or university situations they feel other students should know about. If suggest a topic or a course alert for taking notes, contact firstname.lastname@example.org, attn: Debbie Jabbour
PARENTS, RESPs, AND THE RISING COST OF TUITION
In spite of the fact that nearly 90 percent of Canadian parents would like their children to get a post-secondary education, the rising cost of tuition is quickly outstripping their ability to contribute towards Registered Education Savings Plans (RESPs) and other educational savings plans, according to the Investors Group of Canada. The Group notes that tuition has increased at four times the rate of inflation since 1990, leaving students with the “weight of a large debt at graduation” (Beauchesne, 2005).
One-fourth of Canadian parents surveyed are unable to save anything for their children’s education, saying they simply do not make enough money. Of the parents who do save, 45 percent have only managed to put away at most enough to cover a single year’s tuition. These parents also believe their children will take much longer before they will become self-sufficient.
In spite of the fact that RESPs provide tax advantages and can generate up to a total of $7,200 in federal grants per student (based on the maximum contribution of $2,000 a year contributed into an RESP which generates an annual federal grant of $400), many parents are not accessing RESPs. The Investors Group report suggests that misconceptions and misunderstandings about how RESPs work may be partly to blame. However, it remains clear that RESPs continue to be a government education grant useful only for those families who can already afford to save with rising tuition costs hindering post-secondary participation even in this group of savers.
Beauchesne, E. (2005, August 17). Parents need more RESPect: Study: Rising cost of tuition outstripping education savings plan contributions. Edmonton Journal, G3.
Investors Group Inc. (2005, August 16). Saving for education lagging real cost of schooling, survey says.. Retrieved from http://www.investorsgroup.com/english/about_us/news_releases/2005/050816_FamilyFinances.htm
Investors Group Inc. (2005). Educational financial planning. Retrieved from http://www.investorsgroup.com/english/financial_planning/articles_resources/education/default.htm