How to save for your child’s education

The average undergraduate degree in 2009 cost just over $53,000 for a student living at home, and more than $80,000 for a student who lived away from home¹.

That’s a lot of money, but as a parent, you would probably like your child to obtain a post-secondary education, and the brighter prospects that go with it. The good news is, you have time on your side to help make it possible. If you start saving now — even a modest amount each month — it will really make a difference to your child’s future.

And there are two government programs available to help you maximize your saving power.

• Registered Education Savings Plan (RESP). An RESP helps by letting your contributions grow on a tax-deferred basis. That means the earnings aren’t taxed until they’re withdrawn by your child. Since most students are in a much lower tax bracket than their parents, these earnings should be subject to very little or no tax. You can deposit up to $50,000 per child into an RESP, and there is no annual contribution limit. Learn more about how RESPs can help.
• Canadian Education Savings Grant (CESG). Once you open an RESP, you are eligible to receive a grant from the federal government amounting to 20% of the first $2,500 in annual RESP contributions per child, to a maximum of $7,200. The grant is deposited directly into your RESP. Depending on your income and where you live, you may also be eligible for other government grants, or a higher government contribution. Learn more about the CESG.

It doesn’t matter how much or how little you are able to save — the important thing is to start early. Visit your TD Canada Trust Branch and talk to your TD Canada Trust advisor.

¹TD Economics report, May 17, 2010: “Post-Secondary Education is a Smart Route to a Brighter Future for Canadians”.