It’s true that a post-secondary education is expensive – and getting more so each year.  But it’s equally true that an education is one of the most valuable investments you can make for your children.  In a comparison of graduate salaries conducted by Alberta Learning, on average post-secondary graduates earn more money over their lifetime, experience fewer and shorter periods of unemployment, and have improved health and overall life prospects compared to those with only a high school diploma.*

Fortunately, changes announced in the 2004 federal budget can provide additional financial help for parents who invest in an education for their children – especially when they take full advantage of the new contribution rules that apply to a Registered Education Savings Plan (RESP).  Here’s a look at some of those changes:

RESP grants have been increased for middle- and low-income families.  Now when you save for your children’s education through a RESP, you are eligible for more generous government grants. 

Under the current Canada Education Grant Savings Program (CESG)**, the government matches 20 per cent of the first $2,000 deposited into a RESP on behalf of a child, up to a yearly maximum of $400 – and for families earning in excess of approximately $70,000, those contribution rules will continue to apply.  However, beginning in 2005, for families earning $35,000 or less a year, the CESG program will match 40 per cent of the first $500 and 20 per cent on the next $1,500 saved in a child’s RESP each year – for an overall yearly increase of $100 for each child.

For families in the $35,000 - $70,000 annual income range, the CESG matching contribution rises to 30 per cent on the first $500, or an additional $50.

The new Canada Learning Bond will provide up to $2,000 for each child who was born after December 31, 2003 and is entitled to the National Child Benefit (NCB) supplement, generally available to families with annual net incomes of less than $35,000.  Also eligible for the bond are foster children and other children in the care of those receiving the Children’s Special Allowance.

The Learning Bond starts with an initial $500 contribution to an eligible child, followed by $100 yearly installments until age 15.  These contributions – if invested in investments earning a 3.5 per cent annual compound rate of return – will grow to $3,000 by the time the child is 18, so that the child can use these funds for post-secondary studies.

These new budget breaks can help many more Canadian families pay for the spiraling cost of a post-secondary education.  And there are plenty of other tax-saving, investment-building strategies you can employ to help achieve all of your family’s life and financial goals.  Call your financial advisor to take be sure you take full advantage of every tax break and financial strategy available to you.

*Alberta Government News Release, Post-secondary education pays off big – especially for Albertans, September 8, 2003.

** Canada Education Savings Grant is provided by Human Resources Development Canada

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.