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Business and Financial Pros Say Government Should Do More to Support Post-Secondary Education

Posted: October 03, 2017 By : Tamar Satov
Posted in: Strategic Thinking, Debt Management, Financial Literacy, CRA, tax credits, knowledge bureau, Canada Revenue Agency, Evelyn Jacks, RESP, education savings, tax courses, tax deductions, CESG, financial education, post-secondary education, CE summits, Registered Education Savings Plan, Canada Education Savings Grant, education debt, tuition credits, education deductions, student tax credits, Canadian government, adult education, social benefits, financial assistance, cost of post-secondary education, how to afford university, Canada Learning Bond, debt and cash flow management course

The majority of Canadian financial professionals and business leaders say the government is not doing enough to support post-secondary education, according to an online poll conducted by Knowledge Bureau, Canada’s premiere national institute for excellence in financial education. These findings come despite generous, but underutilized, support from the RESP, Canada Education Savings Grants and Canada Learning Bonds.

Of the 145 poll respondents, just 28.3 per cent agree the government does enough to support post-secondary education, through programs such as the Lifelong Learning Plan and Registered Education Savings Plan. Seven in 10 (71.7 per cent), however, say the government could do more.

“Not only are they not doing enough, but they have removed the education and textbook portion of the education and tuition credits,” says Jo Ruelle. “This means that new grads — often with substantial debt — won’t get a much-needed tax break in the year they head into the workforce.”

“These [tax credits] were quite generous, and I think should be reinstated,” concurs Tim Kalsbeek. “As well, I think the cap of $5,000 transfer of tuition credits per student to a supporting parent should be eliminated, as usually the parents are the ones working and contributing to their kids’ education.”

Respondents were quick to point out, though, that support for post-secondary education should not come from the federal government alone, but also from other levels of government and even employers.

 “In British Columbia, for example, we recently had a policy passed where adult education and tuition are free for all persons in a care and end of care age range, as well as for those less fortunate than most, drawing on social benefits,” says Sandra Gibbs.

“Most employers these days require a potential employee to have a specialized university degree that fits their particular industry,” says another respondent. “It is not governments that should do more to finance post-secondary education — it should be the employers or industry associations who demand the specialized degrees.”

But some questioned why governments or anyone other than a student’s parents should provide any financial assistance. “Having children is bringing responsibility for parents to support them and educate them as well…. Too many people like all sorts of freebies, but who should pay for that? Me, unfortunately, I have my own bills to pay.”

The overall lack of affordability of post-secondary education, however, was the most common thread in the poll responses.

“Even families with decent incomes can’t necessarily fund a college or university education, especially for multiple children, without severe hardship,” wrote one respondent. 

“With most families struggling to cover all their bills month to month, there is far too often not enough left for retirement savings or debt reduction, let alone saving for the children’s post-high school education,” says another.

“Giving tax credits to those fortunate individuals who can already afford a university education is not helping middle-class individuals trying to raise a family making under $50K to $75K per year,” responds another.

There are, in fact, some additional forms of government assistance offered to parents who want to save for their children’s education. Advisors can do their part by becoming more familiar with these programs and making them better known to clients and within their communities

Lower-income families, for example, can apply for the Canada Learning Bond (CLB), an initial $500 grant offered by the federal government for a child’s post-secondary education, with no other parental contribution required. A child could also get $100 every year until age 15, for a total benefit of up to $2,000 in an RESP. A child is eligible to receive the CLB if he or she was born on or after January 1, 2004; is a resident of Canada; has a valid Social Insurance Number; is from a low-income family; and is named as a beneficiary in an RESP.

Although the CLB has been around since 2004, awareness and uptake of the program remains low. A March 2017 report, for example, shows that only one-third of children who qualify for the CLB have received grants, while a more recent Ipsos poll finds just 9 per cent of Canadian parents have taken advantage of the CLB.

And while families at any income level are eligible for the Canada Education Savings Grant (CESG), which is a 20 per cent match of contributions by the federal government up to $500 per year into an RESP, two-thirds of parents are leaving this free money on the table. In total, a child could receive up to $7,200 in Canada Education Savings Grants in an RESP for their post-secondary studies, which is a significant benefit.

The money in an RESP can be used to pay for various expenses related to full-time or part-time studies in apprenticeship programs, CEGEPs, colleges, trade schools or universities. It is worth noting that the CLB and the CESG will not affect other federal government benefits.

Knowledge Bureau would like to thank all the respondents who took the time to vote and comment on our September Poll.

The October Poll question is:

Do you agree with the federal government’s decision to discontinue the sale of Canada Savings Bonds (CSBs) and Canada Premium Bonds (CPBs) as of November 2017?

Take the poll and leave your comment online now.

Additional Educational Resources:
Back to School Tax Tip: Understand and Use the RESP
November CE Summits (year-end tax planning; family debt management)
Debt and Cash Flow Management course
EverGreen Explanatory Notes

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