Ed Min touts $1,200 start to your child’s education
Hey, free money!
Well, not really ‘free.’ It’s come from taxpayers’ pockets, but if you have a child born after 2007, there is $1,200 waiting for you to claim and deposit in a bank or credit union in the form of a Registered Education Savings Plan (RESP).
And by doing that, you are planting a seed to your child’s education. Even better, pointed out Education Minister Don McRae, is the federal government will match up to $400 annually if there are additions to the RESP.
McRae toured the Kootenay East riding April 10 and 11, including making two stops at financial institutions in Fernie and Cranbrook to flog the Education Savings Grant, along with MLA Bill Bennett.
On Wednesday, they stopped into the East Kootenay Community Credit Union in Fernie to deliver the message, along with CEO Jody Burk and staff, that there is a program that all parents should take part in.
McRae and Bennett paid a similar visit to the Bank of Montreal in Cranbrook today to discuss the new grant with a BMO financial planning expert and a local parent.
To access the new grant, families simply open a RESP before their eligible child turns seven. It’s a straightforward process that takes only a short time at a bank or other financial institution. You also can open an RESP securely through an online investment firm, explains a Ministry of Education press release.
Speaking at the EKC in Fernie, McRae, a teacher, said one of the first things he and his wife did when their children (aged three and nine) were born was set up RESPs.
“What Gracie and Chloe are going to do, I have no idea. I just want to know they have options,” he said.
The Children’s Education Fund was first established in 2007, with $1,000 being made available to parents.
“The downside of that was when you got the notice two months after your child was born, if you got a notice at all, you were really busy; you were changing diapers, you’re sleep deprived, you are doing all these things new parents have to do. And there is a very good chance the parents would not be thinking about this money until their child turned 18,” McRae said, adding, all parents want their children to consider post-secondary education, “Whether they’re going to become a plumber, hair dresser or brain surgeon.”
This year, the government upped the fund to $1,200 and McRae said the government is determined to let as many people know about the program as possible.
“One of the things that saddens me is only 52% of parents have signed up for an RESP. There’s lot of reasons parents don’t but we know 100% of parents should,” he said.
According to a recent report by the BMO Wealth Institute, only about half of Canadian parents surveyed have set up a registered education savings plan (52 per cent in B.C.) and only 20 per cent are taking full advantage of the available government grants for RESPs (24 per cent in B.C.).
The RESP “starts a basis of savings,” McRae said, which can be added to over time. It provides opportunity and helps reduce or eliminate the likelihood of student debt hanging over people as they emerge from post-secondary institutions.
“Fernie, Elkford and Sparwood have lots of young families and my message is, if you have a child born in 2007 or after, take a few minutes, drop into a financial institution, drop into the credit union here or one of the banks in the Elk Valley – apparently you can even phone and do this – and register your child. We will put $1,200 into that account. The money becomes available when the child turns 18. It’s going to be a nice way to start their first year of school,” said Bennett, who introduced parent and soon-to-be again parent Jikke Gyorki.
“We have a three-and-a-half-year old and we took out an RESP for him when he was born. And number two is on the way and it’s a no-brainer for me as a parent to open another account. I had to pay my way through school… so if I can alleviate some of that burden for my kids when they want to get into university or college, I am all the more for it,” she said. “Really, if you can access free money, in essence, why wouldn’t you? And it’s simple to set up.”
The money is also “not taxable” Gyorki noted.
McRae concluded that he’d like to see “an RESP season – just like we have RRSP season,” where parents make annual contributions to the fund to build it for the best possible use by their child.
“It costs parents absolutely nothing (to open) and in the end it will be to their benefit. Just knowing that there’s a savings account there, waiting for a young man or woman as they graduate, that gives them another thought process and conversation as they graduate Grade 12. What are they going to do afterwards?”
Bennett pointed out that post-secondary education remains a vital requirement for people if they wish to get ahead or gain employment that they want.
“Most jobs of the future will require some kind of post-secondary education and that includes jobs in skilled trades and technology fields. Opening an RESP for a young child, and getting the new B.C. grant is a great way for a family to begin building savings for the future,” he said.
When applying for the grant funds make sure to have:
* Family member or guardian’s Social Insurance Number.
* Social Insurance Number for the RESP beneficiaries (the child or children).
* One piece of government issued identification for the family member or guardian setting up the RESP.
By opening an RESP account – not only is a child entitled to $1,200 from the Province of British Columbia – he or she also can access other savings grants from the Government of Canada. Parents then work with the financial institution to make the necessary applications. No matching or additional contribution is required to receive the BC Training and Education Savings Grant.
By investing in an RESP, the $1,200 provincial grant, other savings grants, family contributions and compound interest will grow over time, making it easier for B.C.’s children to pursue their chosen careers. Having an RESP in place also makes it easier for grandparents and other family members to help put money toward future education.
Information about the BC Training and Education Savings Grant is available at:
Information about RESPs, including tips on starting an RESP and education savings grants from the Government of Canada, is available at: www.canlearn.ca .
Above photo: From left: Kootenay East MLA Bill Bennett, Jikke Gyorki, Education Minister Don McRae, City of Fernie Mayor Mary Giuliano on hand for the discussion, and EKC CEO Jody Burk.