According to statistics, the average Canadian student paid roughly $15,300 for a year’s tuition and board in 2008. But what about students born today? It is estimated that costs could be as high as $30,000 for the first year of university only 18 years from now.
Fortunately, there are options available for building savings for this milestone. A Registered Education Savings Plan (RESP) is a tax-deferred investment account that is registered by the Government of Canada. There are different types of plans – family, individual or group – but they all have the same requirements and incentives.
Since an RESP has contribution limits, you may prefer to supplement savings in a trust account. A trust account is non-registered and has no contribution limits. It allows you to invest funds on behalf of your child, who will gain access to the funds when they reach the age of majority.