RESPs: A uniquely Canadian way to save for education
Apr 18, 2017
Our country has a strong tradition of empowering Canadians by providing access to education -- from instituting free and compulsory public schooling in 1871, to the creation of a flourishing post-secondary system that today includes almost 100 universities and approximately 130 publically funded colleges and institutes. In fact, Canada is regarded as one of the most educated countries by the Organisation for Economic Co-operation and Development (OECD), ranking 1st worldwide in the number of adults having post-secondary education.
In response to rising costs of post-secondary education, a unique program was introduced in 1972 called the Registered Education Savings Plan (RESP). Since its inception, RESPs were designed to encourage Canadians to save for post-secondary education by providing tax-sheltered growth on money earmarked for a child’s future education. In 1998, the Canada Education Savings Program (CESG) was introduced followed by other government education grants which offer additional incentives to save within an RESP. Over the years, the lifetime contribution to an RESP has grown to $50,000 per child.
The RESP offers Canadians an incentive unlike any other in the world. Tax advantages and government grants are available to encourage saving for education -- and yet only half of eligible children are accessing the benefits. At Knowledge First Financial, we know that RESPs make a huge difference to students. Not only does an RESP ease the financial burden, it empowers students to focus on their studies to unlock the potential that education can bring.