Household budgets will soon be feeling the pinch from back-to-school spending, but there is some relief in sight for further education or training after the kids finish high school.
The BC Training and Education Savings Program (BCTESP), which became available earlier this month (Aug. 15), will provide $1,200 to eligible children for post-secondary education or training programs.
Although the program was announced earlier in the year, the application process is now open for B.C. parents with children between the ages of six and nine.
“Even if your children are just beginning their school life, you need to start planning on how to finance their post-secondary education or training aspirations,” said Jennifer Flentge, an investment expert with First West Credit Union’s Envision Financial division.
“The BCTESP is just one of several grants available that will really help jump start your education savings.”
In addition to $1,200 from the BCTESP, the Canada Education Savings Grant (CESG) provides 20 cents on every dollar you contribute, up to a maximum of $500 on an annual contribution of $2,500.
If a person cannot make a contribution in any given year, they may be able to catch up in future years.
Eligible children could receive as much as $7,200 in CESG by the time they graduate high school.
The Canada Learning Bond is another program which provides eligible children with $500 for their RESP right away with an additional $100 each year until the age of 15.
“There are a several options when setting up an RESP and a variety of grants available, so talking things through with an expert will ensure that you get the right plan for your situation and don’t miss out on any available government funds,” Flentge said.
Anyone applying for the BCTESP, CESG or Canada Learning Bond will first need to set up a registered education savings plan (RESP) naming their child as the beneficiary.
Both spouses may contribute to the RESP, but unlike an RRSP, contributions are not tax deductible.
In addition, any government grants or growth from investment of RESP funds is deemed to be income when withdrawn by the beneficiary.
Although these sources are taxable, students are typically in very low tax brackets when withdrawing the funds.
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Families across the province could miss out on $4.7 billion in education grants — an average of $5,600 per child — if current participation and contribution rates continue, warns Vancity Credit Union.
Last year, B.C. parents failed to claim almost $385 million in RESP grants due to low participation rates in the two main grant programs: the Canada Education Savings Grant had 53 per cent participation and the Canada Learning Bond had 37 per cent.
A breakdown of participation in the Canada Learning Bond by city as of March 31, only 38 per cent of parents in Langley had taken advantage of the incentive.
“Families are missing out on these education grants because they don’t either know about them or have other budgeting priorities,” said Sophie Salcito, a Vancity investment advisor.
“They need to know that some of the grants don’t require any contributions and are essentially free money, plus they can benefit from other grants even with a small contribution.”
Parents can apply for the grants through participating financial institutions.
