BMO RESP Study: Canadian Parents Concerned About Costs of Post-Secondary Education
November 22 2012 - 6:00AM
Marketwired
According to a BMO Financial Group study, 42 per cent of Canadian
parents are not confident that their children will be able to
afford a post-secondary education including tuition, room and
board, books and spending money.
Post-secondary costs have been increasing steadily over the past
decade, with a four-year university degree currently costing
upwards of $60,000. That sum could rise to more than $140,000 for a
child born this year.
According to the study's key findings:
-- The majority (83 per cent) of parents anticipate that they will pay for
their child's post-secondary education, while 44 per cent say their
child will pay for at least some of it themselves.
-- Almost one-quarter (22 per cent) have not spoken to anyone about their
child's post-secondary education, including how it will be funded.
-- More than one-third (35 per cent) of Canadian parents are not aware of
key benefits of the Registered Education Savings Plan (RESP), including
the federal government's contribution matching program.
RESPs and the government matching program
One way for parents to plan for their child's post-secondary
education is to open a Registered Education Savings Plan (RESP) and
make regular contributions. Government grants and compounded
interest can add significantly to total savings.
For example, by contributing at least $2,500 to an RESP
annually, you are eligible for a 20-per-cent Canada Education
Savings Grant. The grant can be as much as $500 per year depending
on your contribution.
"Parents should educate themselves on the various options
available to help them save for their children's post-secondary
education," said Robert Armstrong, Vice President, Managed
Solutions and Registered Plans Strategy, BMO Investments Inc.
"Taking advantage of the RESP government matching program is a
great way to grow your child's education fund. After all, if you
can get free money from the government to send your child to
school, why not take advantage of it?"
BMO offers the following tips for parents, children and
grandparents interested in starting or contributing to an RESP:
Start early: Apply for your child's Social Insurance Number and
open an RESP. Contributing as little as $500 per year from early in
a child's life could result in more than $20,000 in savings by the
time the child enters college or university.
Think beyond cash: Include investments such as mutual funds,
exchange traded funds (ETFs) and guaranteed investment certificates
(GICs) in your RESP to maximize the potential for growth. Another
option, BMO LifeStage Class Mutual Funds(i), allow investors to
choose different time horizons - from five to 18 years to align
with when their child will be starting post-secondary education -
when investing. The funds annually shift their asset mix from an
emphasis on equity funds to fixed income and cash equivalent funds
as they approach their end dates.
Speak with a financial professional: A financial expert can help
you make the most of your RESP by determining the contribution
methods and investing strategies that are right for you.
For more information on RESPs, please visit:
www.bmo.com/resp.
Get the latest BMO press releases via Twitter by following
@BMOmedia.
The survey was fielded online by Pollara between August 17th and
August 24th, 2012, with a sample of 801 Canadian parents with
children under 18. A probability sample of this size would yield
results accurate to +/- 3.5 per cent, 19 times out of 20.
(i)BMO Mutual Funds are offered by BMO Investments Inc., a
financial services and separate legal entity from Bank of
Montreal.
Commissions, trading commissions, management fees and expenses
all may be associated with mutual fund investments. Please read the
prospectus of the mutual fund before investing. Mutual funds are
not guaranteed, their values change frequently and past performance
may not be repeated.
Contacts: Media Contacts: Amanda Robinson,
Torontoamanda.robinson@bmo.com 416-867-3996 Valerie Doucet,
Montreal 416-877-8224valerie.doucet@bmo.com Laurie Grant, Vancouver
604-665-7596laurie.grant@bmo.com
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