Many parents will currently be experiencing the rapid intake of breath that goes with signing your children up for post secondary education.

At this point, you’re either grateful that you contributed to an Education Savings Plan, or you wish with all your heart that you had.

For those parents and grandparents that haven’t got a plan under way, let’s do a little RESP primer.

An RESP is a Registered Education Savings plan. Contributions are not tax deductible, but a grant is available from the Federal Government, partially matching contributions.

The percentage applicable for the match depends on the beneficiary’s family income, and will be 20 per cent, 30 per cent or 40 per cent. In addition, the beneficiary may be eligible for an additional grant called the Canada Learning Bond.

As mentioned earlier, the contributions are not tax deductible, but growth will be taxed to the beneficiary (presumably a low income student) when the proceeds are used for further education. How much of a difference can one of these plans make?

A $50 monthly contribution, combined with grants and a decent rate of return will result in over $30,000 being available for education at age 18.

If your student is bent on Harvard, that won’t make much of a dent, but for kids furthering their education close to home, it will help a lot.

Grandparents can make a huge contribution to the education of their grandchildren, without a large cash outlay. Like many programmes involving money and government grants, there are a myriad of rules surrounding RESPs, and we urge you to consult with your financial advisor to find out if the plans are right for your family, and how they should be structured.

Judy Poole is a Financial Advisor with Raymond James, and has spent the last 38 years involved in the financial industry.

You can reach her at judy.poole@raymondjames.ca or see her website at www.raymondjames.ca/judypoole

This article is provided as a general source of information and should not be considered personal investment advice. The views expressed are those of the author and not necessarily those of Raymond James Ltd. Raymond James does not endorse and is not responsible for the content of external sites Raymond James Ltd. is a member of the CIPF.