Financial planning information for parents
The best advice we can give you when it comes to saving for your child's university education is to know your options and to start planning as early as possible.
We've compiled a list of the most popular options you and your child can look at to help pay for university:
- RESPs and the Canada Education Study Grant
- Government Student Loans
- Private bank loans/lines of credit
- Scholarships, bursaries and awards
Visit the CanLearn website for more information.
RESPs
A Registered Education Savings Plan is essentially a long-term savings account that you, the parent(s), can make contributions into until your child is deemed eligible by the government to enter post-secondary studies.
The great thing about contributing to an RESP is that your savings will grow tax free, they will earn a competitive interest rate, and you will be able to apply for a Canada Education Savings Grant.
Most financial institutions offer RESPs. For a list of prospective RESP promoters, consult the Human Resources Canada website.
The Canada Education Savings Grant (CESG)
The Canada Education Savings Grant (CESG) has been established by the Government of Canada to encourage parents and family members to start saving early for their child's post-secondary education.
In order to be eligible for this grant you will need to establish a Registered Education Savings Plan (RESP) (see above) for your child/beneficiary. Once you have done so, the CESG will be paid directly into the RESP.
This Grant will contribute an additional 20% (up to a maximum of $400 per year) on top of your annual RESP contribution. Other conditions and restrictions apply; please consult the HRDC website for further details.
B.C. student loans
Government student loans are one of the most popular programs that Canadian students utilize to help pay for their university education. These loans enjoy a significant advantage over personal bank loans in that full-time students can qualify to have their accruing interest paid for by the Federal and/or Provincial government while they are still studying.
As a parent, it's important to keep in mind that funds allocated under this program are granted only where the financial resources available to a student (such as family contributions, part-time work, scholarships, bursaries, etc.) are insufficient to meet BCSAP's estimated educational costs for the student. Thus, if your child is planning to apply for BCSAP funding, you will be expected to make a financial contribution to help pay for his/her schooling.
It's also important to note that if your child is under the age of 19 at the time he/she applies or negotiates (i.e. cashes) the student loan, you or another legal guardian/sponsor will need to co-sign the loan document.
Please Note: co-signers must be 19 years of age or over, employed full-time and a resident of British Columbia. You should carefully read and understand the loan document before agreeing to co-sign the loan. Further information can be found on the reverse side of the B.C. Student Loan document.
Private student loans and student lines of credit
Most banks and credit unions offer personal loans and student lines of credit that you and/or your child can apply for.
The main difference between a personal loan/line of credit and the government student loan program is in how the interest is repaid. If your child qualifies for a private loan/line of credit, he/she will usually be responsible for all the interest that accrues as soon as the loan has been negotiated.
In contrast, if your child qualifies for a government loan, he/she will not be responsible for the accruing interest provided that he/she is registered as a full-time student and takes the appropriate steps to maintains his/her interest-free status.
Due to the advantages offered by the government student loan program, we'd recommend that your child try to qualify for a government loan first before looking at private loans. But if you do decide to pursue private funding sources, be sure to shop around and be aware that you may have to co-sign the loan or the line of credit.
Scholarships, bursaries, awards
If you work for a medium to large corporation or belong to any private organizations (such as the Lions Club or a public union), you should inquire to see if there are any scholarships, awards and/or bursaries that are available for your child.
SFU also offers various scholarships, bursaries, and awards that your child may be eligible for.
Please note: in almost all cases, the direct recipient of the scholarship, bursary or award must be the one who applies. In some cases, however, candidates can be nominated. Make sure to read the terms of reference to find out the specific details about the application and/or nomination procedure.