Sending your child to college can be expensive, but there are ways to finance your child’s education. A Canadian Registered Education Savings Plan is an excellent option if you want to save money to send your child to college in a few years from now.
Canadian Registered Education Savings plans are an interesting option since parents make contributions to the savings plan after paying taxes. The beneficiary of the plan, a college student, has to pay taxes on the investment growth. This means the investment growth is taxed at a much lower rate since college students usually do not have an income. In fact, with education tax credits, college students usually pay no taxes at all.
A Canadian Registered Education Savings plan is also a good way to save up for college because the Canadian government will contribute to the plan. The Canadian government will contribute up to $500 a year to each plan. This program is known as the Canadian Education Savings Grant and some college students are eligible for a larger contribution based on their parent’s income and contribution to the plan. Some familiar are eligible for the Canada Learning Bond, which entitles some students to receive an additional $500 when a plan is opened and $100 for each year the student qualifies for this program.
There are additional saving incentives offered by provinces. Families located in Quebec, Alberta and Saskatchewan might be eligible for additional contributions from these provinces.
Opening a Canadian Registered Education Savings plan is a very easy process since most financial institutions participate in this program. Parents have to make regular contributions to the plan in order to qualify for receiving additonal contributions from the government but this is a very affordable way to save up for the education of their children.
Early withdrawals are available, even though recipients have to repay the government the amount that it contributed to the savings plan. This is one of the best ways to save up for college due to the tax advantages and to the contributions from the Canadian government and from provinces.
If you are looking for an affordable way to save up for your child’s education, you should contact your bank to find out more about Canadian Registered Education Savings plan. Anyone can open one of these plans and you will find that you can easily save up for your child’s education by making yearly contributions.