TORONTO, ONTARIO--(Marketwired - Sept. 7, 2013) - With students of all ages starting school this week, a study by BMO Financial Group issued today has found that - despite the rising costs of post-secondary education - only one-third of Canadians currently enrolled in a post-secondary program have a Registered Education Savings Plan (RESP) to help cope with the costs of tuition, books and room and board.
The study also found that three-quarters of students who had an RESP in place say it would not have been possible for them to afford post-secondary education without one.
A four-year university degree can cost upwards of $60,000 including tuition, room and board, books and spending money. For children born in 2013, costs could reach $140,000 by the time they attend a post-secondary institution.*
"The costs associated with attending university or college are rising substantially, so there is significant value in opening an RESP for your child well before he or she heads off to school," said Robert Armstrong, Vice President, Managed Solutions and Registered Plans Strategy, BMO Asset Management Inc.
Student Regrets and Lessons Learned
The study also found that:
- Eighty-four per cent of Canadian students without an RESP wish they had one.
- An overwhelming 91 per cent of those without an RESP say they will set up an RESP for their own children to make it easier to afford post-secondary education.
"A little goes a long way when you save for your child's education through an RESP. Compounded return and government grants can yield considerable savings by the time a child turns 17 years old," added Mr. Armstrong. "It's encouraging that so many younger Canadians are acknowledging the helpful role an RESP will play when it's time for their own kids to head off to universities and colleges."
Government Grants Are Key
One of the key advantages to opening an RESP is the government matching program. The first $2,500 in RESP contributions per year receives a matching 20 per cent Canada Education Savings Grant from the federal government, which can be as much as $500 annually.
"Not taking advantage of the government grant is like leaving free tuition money on the table," concluded Mr. Armstrong. "Even contributing as little as $500 per year to an RESP from the time a child is born could result in more than $20,000 saved by the time the child enters college or university. By combining a grant with what you're already depositing to the RESP, you can make your savings grow substantially."
To learn more about saving and RESPs, please visit: www.bmo.com/resp.
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|Students who have an RESP (%)
|Students who wish they had an RESP (%)
|Students who intend to set up an RESP for their children (%)
Survey results are from an online Pollara survey with a sample of 602 Canadian post-secondary students, conducted between July 22nd and July 25th, 2013. Survey participants are all enrolled in a Canadian post-secondary institution for the Fall of 2013.
*Education costs include tuition and a single residence room with meals and books, from the BMO Education Savings Calculator