Prime Minister Harper Announces Further Support For Families Saving For Their Children’s Education

September 8, 2015

THE PLAN

Building on a strong record of supporting Canadian families who are saving for a child’s education, a re-elected Harper Conservative government will enhance Registered Education Savings Plans (RESPs) by doubling the federal grant for low- and middle-income families.

An RESP is a special individualized savings plan that helps families save for a child’s post-secondary education. RESPs are most often established by parents, but can also be established by grandparents or another family member.

RESPs allow a child’s savings to grow tax free. There are no annual limits, and the lifetime limit is $50,000. Contributions are paid from after-tax income.

RESPs also make it possible to receive extra money through government incentives – the Canada Learning Bond[1] and the Canada Education Savings Grants.

The Canada Education Savings Grant provides matching federal funding on contributions made to RESPs to help families save for their child’s post-secondary. There are three different types of grants:

  • The basic grant provides 20 cents on every dollar for the first $2,500 contributed annually to an RESP;
  • An enhanced grant provides 20 cents on every dollar for the first $500 contributed for children from low-income families; and
  • An enhanced grant provides 10 cents on every dollar for the first $500 contributed for children from middle-income families.[2]

The program is working. By December 2014, Canadian families had saved in total over $44.4 billion in RESPs for their children’s post-secondary education. And nearly
50 percent of all Canadian children under the age of 18 have received a grant since the program’s inception. In 2014 alone, 2.59 million Canadian children received a Canada Education Savings Grant – 1.69 million children received the basic grant, and 900,000 children received both the basic and enhanced grants.

To provide further support to families through RESPs, a re-elected Harper Government will enhance the Canada Education Savings Grants – the matching contribution to Registered Education Savings Plans – for low- and middle-income families by:

  • Doubling the enhanced grant for middle-income families from 10 cents to 20 cents per dollar on the first $500 contributed each year;
  • Doubling the enhanced grant for lower-income families from 20 cents to 40 cents per dollar on the first $500 contributed each year.

An additional $100 in matching federal grants per year compounded for 15 years at, for example, a real annual rate of return of 5 percent, amounts to more than $2,200[3] – representing over one-third of a year’s tuition costs in additional support.[4] This initiative is expected to cost $45 million beginning in 2017-18.

This will be a significant benefit to low- and middle-income families who are working hard to put money aside for their children’s future, and should help incent even greater take-up of RESPs.

THE ISSUE

Canadian families work hard to save for their children’s post-secondary education in order to give them the best opportunities in life.

Prime Minister Stephen Harper’s Conservative government has consistently cut taxes and put more money back into the pockets of every single Canadian family to help ensure that families have more money to spend on their priorities, like paying their mortgage, planning for retirement and saving for their children’s post-secondary education.

The Harper Government has also directly supported the cost of helping Canadians attend a post-secondary institution, including:

  • Establishing the Canada Student Grants Program, the most important reform to federal post-secondary funding in decades.
  • Reforming the Canada Student Loans program to remove in-study income and personal vehicles from the loan calculation, and to reduce the expected parental contribution.
  • Creating a new Canada Apprenticeship Loan to extend federal student loans to apprentices for the first time.
  • Eliminating taxation on scholarship income and establishing a tax credit to help with the cost of textbooks.
  • Enacting tax credits and grants for students pursuing vocational training and apprenticeships.

These measures have supported families as they have prepared to invest in their children’s education, and have helped defray the cost of attending a post-secondary institution.

We have enacted these policies because we know that helping a child save for post-secondary education is a major priority for millions of Canadian families. Canadian parents are working hard to put money aside for their children. According to a recent study, seven of ten Canadians aged 17 or older had savings set aside for college or university in 2013.[5]

Registered Education Savings Plans (RESPs) were the most common savings vehicle adopted by families. In 2013, 77 percent of those with savings had an RESP – up from 69 percent in 2008.

Saving for a child’s future education is a family investment, and Canadian families are working hard to ensure that their children have the resources and education to pursue their dreams. The Harper Government has been there to support them and will continue to do so.

THE CHOICE

Canadians have a choice between the Harper Government’s proven record of low taxes and strong support for Canadian families, and the high-tax, big-debt agendas of the other parties. Justin and Mulcair’s NDP would raise taxes, reduce families’ take-home pay and ultimately leave less money in Canadians’ pockets to save for important things like their children’s post-secondary education.

Justin Trudeau has said budgets balance themselves. He doesn’t understand the basics of managing a household budget, which for many families involves carefully putting aside money every year for their children’s future, including their post-secondary education.

Thomas Mulcair may commit to major spending promises to support post-secondary education, but he can’t tell Canadians how he will pay for them. Canadians can’t afford the dangerous big-debt, high-tax agenda of Mulcair’s NDP.

Only Stephen Harper’s Conservative government has a proven record of lowering taxes and balancing the budget while providing significant support for Canadian families. Only Stephen Harper’s Conservative government will continue to put money back in the pockets of every single Canadian family so that they can spend it on their priorities, like saving for their children’s post-secondary education.

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[1] The Canada Learning Bond is provided to children born on or after January 1, 2014 who are from low-income families (i.e. are eligible for the National Child Benefit Supplement), or are under the care of a public trustee. It provides an initial payment of $500, followed by payments of $100 each year the child remains eligible, up to the age of 15 (for a maximum of $2000).
[2] The income thresholds are adjusted annually. In 2014, families whose net income was $43,953 or less were eligible for the low-income enhanced grants, and families whose net income was between $43,953 and $87,907 qualified for the enhanced middle-income grant.
[3] See: http://www.esdc.gc.ca/eng/publications/evaluations/learning/2009/sp_951_05_10-eng.pdf.
[4] According to Statistics Canada, average Canadian tuition costs in 2014-15 were $6,210. See: http://www.statcan.gc.ca/daily-quotidien/140911/dq140911b-eng.htm.
[5] See: http://blog.vanierinstitute.ca/family-finances-investments-education/.

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