TORONTO, ONTARIO -- (Marketwire) -- 03/27/13 -- With many Canadian high school students beginning to receive acceptance letters to colleges and universities, the BMO Wealth Institute today launched its inaugural report on saving for and funding post-secondary education.
The new BMO Wealth Institute provides insights and strategies around wealth planning and financial decisions. The Institute's team of professionals have deep expertise around all aspects of wealth planning including retirement, estate, tax and insurance.
"We launched the BMO Wealth Institute to provide our clients with expertise and access to a full range of professionals to address the opportunities and challenges Canadians face with their finances, and to help prepare them for a confident financial future," said Caroline Dabu, Vice President and Head, BMO Wealth Planning Group.
Student Tuition and Debt on the Rise: RESPs and Beyond
The BMO Wealth Institute's inaugural report, titled Student Tuition and Debt on the Rise: RESPs and Beyond, examines the cost of post-secondary education, the mistakes parents make when saving for their children's education and the many savings vehicles available in addition to RESPs.
According to the report:
-- A four-year university degree can cost upwards of $60,000, rising to more than $140,000 for a child born this year.-- Three-in-four parents with children under 18 have not made a detailed estimate of the total cost of putting their child through post-secondary education.
The report also discusses the critical role that RESPs play in saving for post-secondary education. As the report explains, opening an RESP is a smart way to maximize education savings and to role-model sound saving habits for children. In addition, the tax-sheltered investment growth and eligibility for government grants can make a big difference to a child's future. However, the report revealed that:
-- Only half of Canadian parents are using an RESP to save for their child's education, and only 20 per cent are taking full advantage of the available government grant.-- Seventy per cent of parents recommend saving right from the time of their child's birth, but only half have set up an RESP.
Five Other Savings Options to Consider
While Canadians generally think of RESPs when choosing options for saving for post-secondary education, the report examines several other suitable strategies for parents and grandparents to consider:
Non-Registered Account: Thirty-eight per cent of Canadian parents are unaware that a non-registered account can be earmarked specifically for post-secondary education savings. Flexible and easy to set up, a non-registered account is not subject to any special rules or restrictions concerning contribution amounts or frequency. Parents can maintain control over the timing and use of the funds, even when the child reaches the age of majority.