Financing Your Child's Education/ Financer Les études D'un Enfant

Perhaps the best way to finance a child’s post secondary education in Canada is to save money through the Registered Education Savings Plan or the RESP. It allows you to contribute up to $50,000 per child towards post secondary education with the addition of the Canada Education Savings Grants or a 20% grant per year or up to $500 per year, per child. That child could collect up to $7,200 of the CESG’s to allow them to attend post secondary education. Ultimately when they go to school you can effectively get the money out completely tax free, the contributions will come out tax free, any income growth and government grants will be theoretically taxable to the child but because the child has basic credits, tuition credits, education credits, text book tax credits, it effectively does come out tax free in almost every scenario Finally what if that child doesn’t go to school? Well, it depends on the type of plan. If you have a single plane or if you have a multi-beneficiary family plan, if it’s a multi-beneficiary plan then any other sibling could use the funds for post secondary education. If it is a single family plan and there are no other siblings then the parents can get their contributions back and roll up to $50,000 of the income in growth into their own RRSP. Be sure to speak to a financial advisor to talk about how an RESP may work in your situation.