The cost of college is something that has continuously outpaced inflation in Canada. Over the past twenty to thirty years, the cost of going to a four year college has increased three to four times. There are many families that are struggling to understand how to pay for their children to go to college. Due to this crisis, there are many families that are having to take out student loans in order to pay for the cost of college. At the end of the day, there are better ways to get college paid for. One of the best ways is through Registered Education Savings Plan options in Heritage Education Funds . Here are several reasons to choose RESPs in your life to pay for college.
Perhaps the best reason to use RESPs to fund an education savings plan is the fact that they are taken pre tax instead of after tax. Over time, this can make a huge difference in the amount of money a person can accumulate. For example, if a person has a twenty percent tax rate on their income and they can deposit money before this twenty percent hit, they are effectively earning that rate of return on their money. In the economy that we live in today, it is important to understand exactly how to take advantage of all of the tax benefits that a person can. There are many people that have built tremendous sums of money for college due to the fact that the principal can grow tax free.
Peace of Mind
Another great reason to use RESPs in funding a college education is that it gives peace of mind. If you start saving for college when a child is young, it really will not take much per month in order to pay for a college education. The key is to start young and continue to invest no matter what. At the end of the day, consistency is key in investing to pay for college. There are many people that only invest around $100 a month for 18 years and they have enough money to pay for their children’s college education. Picking a college that is reasonable in its cost is another important step in making sure you have enough money to pay for the cost of attendance and tuition. The RESPs are a great way to save for college in Canada and should be explored by everyone.