Human Resources and Skills Development Canada
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Human Resources and Skills Development Canada

www.hrsdc.gc.ca

Why should I save for post secondary education?

Saving today will ensure that more educational opportunities are available for Canadian children in the future. The simple fact is that about two out of three new jobs require more than a high school education. People have to know how to work with technology on the shop floor and in the office. They need more skills before they can start to build solid careers.

For most people, those skills and extra education pay off in real benefits. College and university graduates are more likely to be working than people with less education. They are more likely to keep their jobs when times are tough. They earn more. But the costs of getting an education have gone up. A year in a university arts or science program can cost $7,000. Students face other costs if they go to school away from home. Over the past decade, tuition fees and other student costs have more than doubled and have been rising faster than family income.

Most Canadians understand those facts. They understand the importance of skills. That is why almost a million Canadians are full-time students in universities, colleges, vocational and technical institutes and CEGEPs. Another 430,000 Canadians are part-time students. Canada has the biggest share of its 18-21 year olds in post-secondary education of all industrialized countries.

More and more families are looking ahead. They are already putting money away for tomorrow's investments in education. Even small savings each year will translate into substantial savings later.

The goal of the Canada Education Savings Grant (CESG) is to provide an incentive for Canadians to save for a child's post-secondary education by investing in Registered Education Savings Plans (RESPs).

How much do I need to save?

Many parents wonder how much to save. They also wonder how soon they should start. The answer is simple. Save as much as you can afford. Start today. By starting early, tax-sheltered earnings on your savings can grow surprisingly quickly. You also earn the largest amount available from the Canada Education Savings Grant on top of that money.

The Importance of Starting Early

Here's an example:

  • Rick and Diane have a three-year old named Hayley. If they put $25 every two weeks into Hayley's RESP, that adds up to $650 a year. Their investment will also earn a $130 Canada Education Savings Grant.
  • Over 15 years, Rick and Diane keep contributing at the same rate. They keep earning CESG money on top of their own savings. If all this money grows at 5% per year, then Hayley will have almost $19,000 to help pay for her education. Of course, the amount will be even higher if Hayley's grandparents or relatives also contribute, or if her parents increase their contributions...

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Date Modified:
2011-08-18