Student loan, Education loan
Education - Canadian Registered Education Savings Plans
Category: Student loan, Education loans
In today's competitive workforce a post secondary education is a necessity to obtaining a quality job. A four year degree at a Canadian university will cost you around $55,000 in present day 2008. With the cost of education increasing at a rate greater than inflation, the cost of education for a baby born today who is expected to enter post secondary education in 2026 will be approximately $116,000.
For the average Canadian family that represents a substantial amount of money. So, how can Canadians ensure they are prepared when it comes time to send their child off to a post secondary educational institution? The answer is to start saving early and take advantage of registered education savings plans (RESPs).
An RESP is a special savings account designed specifically by the Canadian Government to optimize savings for education. Anybody may open an RESP account for a child including a parent, grandparents, relative or family friend. The person who opens the RESP account is known as the Subscriber and the child for which the savings is for is referred to as the Beneficiary.
Benefits of an RESP
There are many benefits to opening a RESP account such as.
• Money contributed to the RESP account is allowed to grow tax free
• There are several Government Grants available to increase your education savings
• Withdrawals from the RESP account are taxed at the child's marginal tax rate which is often 0% resulting in substantial tax savings
The government of Canada will help you save for your child's education through government grants.
The Canadian Education Savings Grant (CESG) is a grant offered when you contribute more than $500 a year to your child's RESP account. You may receive up to an additional $400 a year through this grant with a lifetime maximum contribution per child of $7,200.
The Canada Learning Bond (CLB) is another grant offered by the government of Canada aimed specifically at low income families. The Canadian Learning Bond is only available to children born after December 31st 2003 and is limited to $2,000 per child.
Selecting an RESP provider is an important choice. Most banks and other financial institutions such as credit unions offer RESP accounts. As well there are specific companies that specialize in only selling RESP accounts such as Heritage Trust and Canadian Scholarship Trust.
Steps To Opening A RESP
To open an RESP account follow the steps listed below.
• Ensure your child has a social insurance number (SIN)
• Select an RESP provider
• Decide of the type of RESP account that you wish to open
• Select investments that will grow your savings
• Contribute money to your RESP account
Registered Education Savings Plans are a smart way to save for your child's future post secondary education. Start saving early and you'll ensure that your child will have the opportunity their post secondary institution of choice and graduate with a minimized debt burden.
Visit www.resp-canada.ca for a complete guide on Canadian RESPs.
Paying For Further
Education - The Alternatives
Category: Student loan, Education loans
The prospect of paying significant tuition fees for further education, as well as needing further money to live day-to-day can be off-putting to many prospective students about to leave school or sixth-form college; as a result many are choosing to jump straight into the workplace rather than opt for further qualifications.
However, there are also a number of government grants and college bursaries available to those who fulfill certain criteria. So, before applying for a higher education course it is worth doing a little research to see what help is available as there could be an alternative to the prospect of spending many years repaying student debt. But, don't despair. Even if after researching all the help available it transpires that you will still have to take out a Student loan, Education loan it is worth remembering that you will not be required to repay a penny until you have left university or college and are earning at least ?15,000 per annum.
Student loan, Education loans from the government changed after the 2005/06 academic year meaning that anyone now applying for a full-time higher education place could qualify for annual loans of up to ?3,145 to cover the cost of tuition fees and up to ?6,475 to cover other living costs, including accommodation. The interest rate payable on Student loan, Education loans is linked to inflation, meaning that in real terms you will pay back roughly only what you borrowed, and would certainly be a cheaper option that taking out a personal loan.
In addition, grants are also available to those who qualify, but unlike Student loan, Education loans they do not need to be repaid. Starting in academic year 2008/09 up to ?2,835 per annum is available to students depending upon the amount of their annual household income. Any student from a household with an income of less than ?25,000 per annum will qualify for the full maintenance grant of ?2,835. A student from a home where the annual income is ?50,000 would qualify for ?524 and once the income exceeds ?60,005 no grant is claimable.
Bursaries are also available directly from universities and colleges, and the amounts vary according to the institution. If you are thinking of applying to a particular university, first research the financial help available from that educational establishment. In some cases it can be as much as ?1,000 for those on a full maintenance grant.
Even mature students don't necessarily need to resort to a Student loan, Education loan or personal loan drawn from a bank or other lender to pay their way through college, as they could also qualify for help. Dependent upon their personal circumstances and providing they are less than 60 years old when starting their higher education course mature students are usually treated as any other undergraduate with regards to the financial help they can obtain.
Financial help is also available to those who choose to undertake part-time undergraduate study, but anyone thinking of choosing that route of higher education should do their research according to their own personal circumstances, as financial aid varies widely.
Disclaimer: This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.
More Parents Take
Out Loans to Fund Children's Education
Category: Student loan, Education loans
An increasing numbers of parents are applying for bank loans to fund their children through private school, new figures reveal.
Household expenditure on private school fees reached approximately ?7.9billion last year, up from ?6.9billion in 2001-02.
Sainsbury's Bank revealed it had seen a 38 per cent increase in loan applications to cover independent school fees during the past year.
Loans manager at Sainsbury's Bank, Steven Bailie, said he expected to see a further rise in numbers as fees have gone up by about 50 per cent since 1999.
He said that about 620,000 children are now being educated in private schools, and they are consistently charging more in fees.
'We expect to see a growing number of parents taking out loans to help pay for their children's education. Those parents doing this need to make sure that they shop around and find a competitive loan rate.'
Based on ONS data, the bank's figures showed families in London usually spent the most on education fees, at an average of ?577.20 per year.
Families in the East Midlands spent the least, at around ?140.40 per year.
These average figures were generated from all households, including those without children in private education and those with no children.
Separate figures from the Independent Schools Council, however, show that average fees are now about ?21,600-a-year for boys' boarding schools whilst for girls, the figure is ?20,400.
For pre-preparatory private education (for children aged two to seven years), parents can expect to pay between ?1,000 to ?1,500 a term.
Fee fixing allegations
The annual rise in private school charges was under public scrutiny recently following an investigation into alleged fee fixing which saw fifty of the country's leading public schools ordered to pay out a total of ?3.5million.
Earlier this year it was revealed that schools including Eton, Harrow, Winchester and Cheltenham Ladies' College must each pay ?10,000 in addition to making payments averaging ?60,000 to a new educational charity.
An investigation by the Office of Fair Trading led to the payout.
The schools had admitted that, over the past three years, they had been sharing detailed and sensitive information about the fees they were intending to charge both for boarding and day pupils.
Meanwhile previous studies have already revealed that tens of thousands of parents are keen to send their children to private school as a result of mounting disillusionment with the state sector. This inevitably brings a financial consequence.
They are cancelling family holidays and juggling two or three jobs in order to fund a private education.
The ISC recently provided detailed analysis covering hundreds of thousands of postcodes and collected from 900 member schools.
The research showed that nearly a quarter of ISC pupils (23.8 per cent) originate from average or below average backgrounds. Almost 10 per cent (some 43,000 pupils) live in postcodes where household income is less than the national average.
Of these, 10,000 reside in officially classified 'hard-pressed' areas and include families on low incomes, single parents on council estates and people living in high rise flats.
And another survey by ING Direct found that almost half (44 per cent) of parents are saving money specifically for their children's education. In the last few years, this figure used to stand at just 12 per cent.
The fact that many parents are willing to take out loans - and thus pay interest - to finance school fees demonstrates the importance that they place upon high quality education said a spokesman for the ICS.
Independent school parents who have average or below average incomes represent about a quarter of the total and many are going without exotic holidays or new cars to give their children an independent education.