Wealth Advisor Emphasizes RESPs to Manage Escalating Tuition Expenses
As tuition fees continue to climb across Canada, families are seeking effective strategies to finance higher education. Tina Tehranchian, a senior wealth advisor at CI Assante Wealth Management Ltd., recently appeared on BNN Bloomberg to discuss practical solutions, highlighting Registered Education Savings Plans (RESPs) as a crucial tool in this endeavor.
The Growing Challenge of Tuition Costs
Higher education expenses have been rising steadily, outpacing inflation and placing significant financial strain on students and their families. This trend is expected to persist, making early planning essential. Tehranchian points out that without proactive measures, many may struggle to afford post-secondary education, potentially limiting access and increasing student debt burdens.
How RESPs Can Mitigate Financial Pressure
Registered Education Savings Plans offer a structured approach to saving for education. Contributions grow tax-free, and the government provides grants, such as the Canada Education Savings Grant, which can match a percentage of contributions. Tehranchian explains that starting early maximizes these benefits, allowing investments to compound over time.
Key advantages of RESPs include:- Tax-deferred growth on investments
- Government grants that boost savings
- Flexibility in investment options
- Withdrawals for educational expenses are taxed in the student's hands, typically at a lower rate
Additional Strategies for Education Funding
Beyond RESPs, Tehranchian recommends diversifying funding sources. This might involve exploring scholarships, bursaries, and part-time work for students. For families, considering other investment vehicles or loans can supplement RESP savings. She stresses the importance of consulting with a financial advisor to tailor a plan to individual circumstances, ensuring all available resources are optimized.
The discussion underscores the critical need for financial literacy in education planning. As costs rise, tools like RESPs become increasingly valuable in securing educational opportunities without overwhelming debt.
