Plan now for post-secondary education

When it comes to planning for your child's post-secondary education, there is good news and bad news.

The good news is there are many things you can do to prepare for your child to attend college or university.

"The bad news is that there is every likelihood that tuitions are going to increase so you need to factor in the need for more than you bargained for," said chartered accountant, Dr. Rick Robertson, a professor at the Richard Ivey School of Business at the University of Western Ontario in London.

So what can you do?

Tim Cestnick, FCA, principal, The WaterStreet Group Inc., in Burlington and author of the book Winning The Education Savings Game, explains there are essentially five ways of paying for post-secondary education begging, borrowing, "stealing," sweating and saving.

"Every family needs a plan that outlines the education funding that will come from each of these five sources. Of course, I recommend the majority come from savings - and the sooner you start, the better. It's best to begin at least 10 years ahead of the time when the money is needed," said Cestnick.

Robertson agrees. "Before you know it, your child will be 17 and on the verge of taking this next big step in their education. I strongly advocate taking advantage of Registered Education Savings Plans (RESP) and saving money in a tax-sheltered environment. The government contributes 20 per cent annually, for each dollar contributed each year. The maximum is $400 based on $2,000 of contributions. Small regular monthly contributions make it a relatively easy process."

Robertson also suggests that you encourage grandma, grandpa and other relatives to contribute to an RESP. "It's a very nice legacy to leave to your grandchildren - and most grandparents can strongly relate to the importance of education." One caution though: if multiple people set up an RESP for the same beneficiary they must share the contribution limit of $4,000 in any year.

Brought to you by The Institute of Chartered Accountants of Ontario.