S PELCEARNING I A L F E AT U R E ROAD TO HIGHER
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We d n e s d ay, Fe b r u a r y 2 6 , 2 0 1 4 Leader-Post / leaderpost.com
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Leader-Post • leaderpost.com Wednesday, February 16, 2011
How to help kids Investing prepare for college life
in the future
“Returning to school is a major decision and it’s important to them carefully with a financial planner. By Debra Clarke spending money. But many college — Many of this year’s high For example, Bryden notes that “…all financial institutions discuss your plans with all those who may be impacted,” says For (MS) L-P Specialty Products students more“There than spending school graduates will be leaving home Bryden. is more to the decision than just the cost. What offer Student Credit lines as a flexible credit solution and each In Canada, university graduates can expect to earnneed money oncewill theyyour reach campus. a college campus in that the fall. Suchschool graduates. day look like? How will this impact your children’s institution follows its own credit policies. Often co-signors are 61forper cent higher than of high Rising tuition costs have it a departure is often bittersweet Canada for schedules andmade extracurricular activities? Will you need different required.” Human Resources Development (HRDC) notes difficult, impossible, for parents Does your current employer offer kidsworkers and parents Young men and education When it comes to a mortgage, Bryden says this could be a childcare arrangements? that withalike. a post-secondary willif not to bankroll their kids’ everyday women look forward to the leaves of absence? Will you lose your good option for those who own or have equity in their homes. likely seetypically their wages grow faster than those with only educational expenses. a result, many college and independence that medical/dental benefits and how will this impact you “It’s a big decision to borrow against your home to fund a freedom high school diploma. Add tocollege that the fact that in As students themselves forced to life can provide, sameofmen education, and one you need to discuss with your financial financially?” today’s market,but 70 those per cent jobs require post-find manage their own money for the and women know they will miss the When it comes tofirst financial options for those who want to planner to determine if it is right for you.” secondary education. time inwill theirsend lives.one Parents can teach familiarity home, as well.the Parents, When it or more children to school, there are several to “We can of only anticipate value too, of education financial lessons, such as and bursaries; Registered Education comes to higher emotions head consider: scholarships behave justmixed as important —when if notkids more importantsimple — in the benefitsSaving of buying groceries as to college, their sadness a child RBC the Programs (RESPs) — which Bryden says offers families education — future,” saysasPamela Bryden,over Manager, Financial opposed to“…the dining out leaving home is met with the pride they gift or of ordering time andinthe ability to save for future goals;” and either your own Planning for Southern Saskatchewan. MNS photo each night. student loans. feel that the childout they raised is setting or your Bryden points that, according to HRDC, tuition out almost to makehave theirdoubled own wayover in the world. scholarships fees the past 15 years. With College is alsoStudent where many young and bursaries are awarded on the basis children’s — of academic merit other expenses rising quickly, estimated men that and within women first sign up for aand/or credit extracurricular activities although Bryden says this Few moments in life involveit’s such a major typically the next 15change to 20 years, four-year card. Parentsbursaries can teachare their kids theawarded on the basis of financial need. is significant as the amoment whenundergraduate existas through degree away home first could cost between $75,000 to Many options basics of managing credit, such the various schools, companies, fields of d e c i s i o n a young manfrom or woman arrives on re q u i r i n g study, $100,000. benefit of paying offetc. a balance before a college campus. First-year college AninRESP is negative a flexible savings plan that allows money i m p o r t a n t These are intimidating shouldn’t interest rates kick and the students often don’t knownumbers, what to but they (MS)to—grow When choosing a college, students a school far away from their folks is ideal, financial choices post-secondary education tax-free. Bryden beexpect the reason forward. says one deposited ramifications of missing for payments. once you they don’t arrivemove on campus, butBryden often look for the best academic institutions. the reality of being far away from home is she says RESP is a good option for parents because of the tax and ofthere the are most important things whenwho steps parents can takepeople to help can do Parents can“An afford to provide While it’s hard to argue with that approach, as struggle for many college students who r e c o m m e n d advantages and government matching programs to help make considering higher education — whether for themselves their kids prepare for college life. financial support for their children high school students facing the decision of engage attend college outside of their hometowns. that you their child’s education goals a reality.” or•for their children — is to plan ahead. enrolled in college should reach a Teach kids how to schedule their where to spend the next four years of their Homesickness is a very real thing for college Student are funding programs from federal/provincial your financial “Know what your goalmany is. It’s critical tofinancial prioritize agreement with loans their children time. One of the things college lives should know that the right university students who are away from home and on governments andMake financial your goals terms of time and importance. it’s are before If they off to college. sure institutions. These loans are based on planner early in kids findinonce they arriveframe on campus is not necessarily the one with thethe best their own for the first time. process. A individual financial circumstances. Government funded your dream to achieve an education, undoubtedly it kids know your financial support does is that their life is suddenly much academic reputation. In addition to homesickness, college-bound good planner programs allow you to defer interest payments until completion willless paystructured off in dividends in the future. I strongly not mean they have unlimited access to and their amount of A host of factors come into play when students should consider the cost of travel of make school. Many that financial recommend sit down with a student orfunds, careerand your it known such institutions, like RBC, have loan will be pleased downtimethat has you increased considerably. finding the right match between student and before enroling in a college or university that’s programs with preferred interest rates. Students will to work with counsellor andschool, a financial supportyour will not continuefor if students kids aren’t Unlike high whichadvisor keeps to determine university. Academics should— always carry the and far from home. Mom and Dad might not be you have to pay the monthly interest costs while attending school bestmany course.” performing well in the classroom. kids in class or involved in consider a your able to afford to fly their college students flow.weight, but students shouldcelebrate From a financial standpoint, as which may create issues with cashmost extracurricular activities from education the early is•viewed Encourage kids to contact any host of other factors before ultimately deciding home several times per year for the holidays Other options include using RRSP’s, student lines of credit success along an investment in one’s self. afternoon, That return on investment morning through the late roommates before the school year where to continue their academic careers. and other breaks inPamela the school year, and is one of the factors considered when looking at and borrowing against your existing mortgage. These options the way. Bryden college affords students much more begins. Part of the trepidation many the burden of financing that travel can fall come with additional risk and Bryden recommends reviewing financing an education. Other factors to consider free time, which is theirs to use as kids have when leaving for college Cost on students. If you are not planning to work include total borrowing Bryden they see fit. cost Someofkids dive right (although into concerns how they may or may not In a perfect world, students would not during the school year, then financing trips recommends caution especially if there is on-campususing activities, whilehere, others develop a relationship with their new have to worry about financing their college home may prove very difficult. lackstruggle of clarity ontheir long-term goals, since debt may to use free time to their roommate. Many schools assign educations. But that’s not a world in which accumulate faster than anticipated), loan repayment, advantage. roommates months in advance of the today’s students live, so the cost of a college Environment and potential impact on family members. school year, giving kids ample time to Parents can teach time management education is something nearly every collegeBoth the academic and social environments make contact Introduced and make arrangements skills such as how to establish a What other advantages are or there to investing in an RESP? by the federal government a number of consider years agobefore bound student must making at a college university merit consideration goingtotopromote bring higher education schedule so all of Learning that free time encouragewhen parents to open RESPs for theirtochildren, in an is effort for decision. a greater When number of at To his or her looking finances, students are deciding where continue the The Lifelong Plandoes allows you regarding to pay whom such as a televisionEducation Saving not to waste. This schedule befunds. certain items, federal government introduced Some the Canada Education Canadians, Registered Programs students need to (RESPs) consider offer the cost of living their educations. students thrive in Savings for go training or education with can RRSP or coffee pot or evengrandparents, furniture, if adjusted on a weekly basis depending Grant (CESG) ina 1998. Underacademic the program, the government parents, friends and onebooks of the most in a relatives dorm, food, and the additional competitive environment, while will • You can withdraw up to $10,000 per calendar the room can fit any. ways Parents on coursework or extracurricular match 20 per cent of the first $2,500 contributed annually effective of should saving for a child’s post-secondary education. expenses college students typically have. others tend to fare better in a more casual to each year to finance full–time training or encourage such contact so kids can activities. Once kids learn to manage beneficiary, for a maximum $500which per year. The To encourage families to consider RESPs, the government offers where While cost should not dictate high setting. Students grant should of assess post–secondary education. get a feel ofgrants who they be benefits living with their time effectively, including using maximum CESG over the life for of them the plan is $7,200 andwill other that make contributing toultimately an RESPgo theto college, school students environment is best and choose a per • The student can be you or your spouse, and but not lay the right groundwork a friendship breaks between classes to review notes beneficiary. Depending on abest family’s net income, a special choice for many Canadians. students should know that eventually student university that suits them as a student. your children. before theyWhat even step on campus. from a recent lecture or upcoming class, enhanced available that doubles the incentive on the loans will have to be repaid with interest, soCESG is A college or university’s social environment is an foot RESP? • If the student meets disability requirements, The feeling of An knowing someone on they’re likely to get the most out of first $500 contributed each year. In addition, unused grant room those who do not want to bury themselves is another factor for students to consider. RESP is a registered savings account that is specifically then the training/education can be on a part-time campus candesigned greatly reduce the anxiety themselves academically and find they can be carried forward, up to a $1,000 a year. in student loan debt after graduation would Larger schools tend to rely heavily on Greek to help save for a child’s post-secondary education. basis. many kids feel theyinarrive at grows tax-free have more time to pursue extracurricular be wiseuntil to choose a university that’s more life, while smaller schools may be more When can I start making RESP contributions? Thewhen money the plan it is withdrawn. • The total amount that can be withdrawn is school for their freshmen orientation. activities, as well. affordable or one that’s offering a more intimate and less exclusive. who Contributions to an RESP can be made Students as soon as a child is While RESP contributions are not tax deductible, the investment $20,000 with withdrawals over a maximum of four The day a student for college •consecutive Discuss finances scholarship and plan. grant package. hope to join a sororityfororafraternity might born. The plan can stay in existence maximum of 26 years. earningsleaves are sheltered from tax asattractive long as they are in the years. and establish a is a significantTherefore, day for parents and arrangement. Many college Unlike studentare loans, scholarships and grants benefit from a school with a thriving Greek life, when the investment earnings eventually •financial Amounts that are withdrawn are not subject to What happens if my child does not go to college or university? students alike. Parents can take a to pay for the freshmen struggle to manage their do not have to be repaid. while those who want a more intimate social withdrawn and used beneficiary’s post-secondary taxes on withdrawal. There are several available options. For one, the money can be number of steps to make the transition money. Some might never have had environment might prefer a smaller school education costs, the payments are taxed to the beneficiary. Since • At least 10 per cent of the amount borrowed withdrawn. In this case, the principle will be refunded tax-free, to college easier for their college-bound a jobbe during high school all of the students seem to know one home the beneficiary is a student, there Distance will often befrom little or no tax to but the investedwhere must repaid each year,while overothers a maximum period earnings will be entered as taxable income for the son or daughter. who did work only did so to earn another. While many high school students may think pay. of 10 years. year. Alternatively, and providing they have room, $50,000 of the • Credit is also a viable option. Recommended as How much can I contribute to an RESP? plan’s earnings can be transferred to a personal or spousal RRSP an option once planned savings (RESPs) are There is a lifetime maximum contribution limit of $50,000 for where it will remain tax-sheltered. However, in either instance, depleted. any one beneficiary. any CESG received must be paid back to the government.
Things to consider when choosing a college
Registered Education Saving Programs