The cost of a post-secondary education has been rising steadily. The cost can reach over $15,000 a year at a Canadian university. If your children will be attending a U.S. university or college, the annual cost could be much higher. Many parents now wonder if four years of post-secondary education will be enough for their children. To compete successfully in today’s workplace, it’s increasingly necessary to have a post graduate degree.

Today, four years of university will cost about $60,000 using the $15,000 annual estimate and a 5% inflation factor for tuition, living expenses and other costs. In five years, that rises to $66,000. To ensure and help pay for your children’s post secondary education, it wise to and cost effective to save now and over time with a Registered Education Savings Plan. While contributions to the plan are not deductible, income earned in the plan is tax-sheltered until distributed to the student beneficiary, whose income will likely be too low to attract tax. As well, the Canada Education Savings Grant programgrants an extra 20% on top of the annual contributions paid into the plan, up to $400 per year (lifetime maximum of $7,200 total per child), as an additional RESP contribution for anyone investing in Registered Education savings plans for children.

In the event the beneficiary does not pursue a post-secondary education, one may under certain conditions, designate a new beneficiary, or transfer up to $50,000 of the accumulated investment income into a personal or spousal RRSP when there is room, or withdraw an accumulated income payment, which is subject to tax.