REPEAT-BMO RESP Study: Canadian Parents Concerned About Costs of
- More than 40 per cent are worried about how their children will be
able to afford post-secondary education
- A four-year university degree can cost more than $60,000 today;
could rise to more than $140,000 for a child born in 2012
- Opening an RESP for your child can be a critical part of a strategy
to save for post-secondary education
TORONTO, ONTARIO -- (Marketwire) -- 11/22/12 -- 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
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
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
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.
Amanda Robinson, Toronto
Valerie Doucet, Montreal
Laurie Grant, Vancouver
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