Vancouver Ethiopian Blog

Ethiopian life in Vancouver, BC, Canada

Planning for your Children Higher Education

Getting a higher education is one of the dreams of all Canadians, including Ethiopians in Canada.

Going to university or college in Canada is not easy for first generation Ethiopians, and all immigrants. Some first generation Ethiopians have managed to graduate from universities and colleges in Canada despite all the difficulties of making a living. Some even have done their PhD. I am proud of them all.

The tuition cost is not that much expensive if you are enrolled in a government funded higher educational institution. What eats a lot of your money is the living expenses. On the other hand, the cost of post-secondary education keeps rising. Experts predict the cost of four years of University at a mid-level university will be over $100,000.00 by the year 2020.

Higher education determines not only your children’s future earning power, but their quality of life too. Therefore, how do you go about getting higher education for yourself or your children? How do you save money? When can you start saving for your children education? Is there a limit to how much you can save within or outside RESP?

RESP

The best way to save for your kids education is by subscribing a Registered Educational Savings Plan (RESP). Go to this website to learn more about opening an RESP account. To find an RESP provider, click here. RESP providers are mostly financial services companies, like your bank. You can ask these providers, these questions before you select one.

Under this plan, you can save up to $2,500 dollars per year (~$209 per month) per child from the day your child is born and the government will contribute $500 per year to your child’s account. This is great! In fact, you are getting  $500 free every year for your child with your $209 monthly contribution.

Depending on your family income, additional funds could be available from the government. Click here for more details.

Let us see this example:

A baby boy named Timhirt (Tim) was born in February of 1999. His parents decided to put $209 per month in RESP away for their child in June 1999. Tim is now 11 and will be joining a university in about 8 years. Without taking into consideration any interest or investment incomes, Tim today (2010) has more than $3,000X11 or $33,000 in his RESP account.

Mind you, all this saving was for the past 11 years only; and Tim’s parents could continue to contribute for the next 7 years, during which they could add ($2,500+500)X7 years or $21,000, for a grand total of $54,000. Yes, Tim could have upwards of fifty grand by the time he turns 18.

But, just remember that there is a limit to the amount of contribution. Click here for more details. If you over-contribute, there is a tax implication.

Conditional Gift

The Government of Canada (Alberta and Quebec provinces have a special programs in addition to the federal) gives the child $500 a year, provided that the child will go to a university or college. If the child decides not to go for a higher education, then under certain conditions, the money could be given to a sibling. Otherwise, portion of the the money that the government paid over the years must be returned back to the government.

What happens to the money in an RESP if my child does not continue education after high school? Click here for a complete list of answers.

After the student joins a college or university, then he/she can request for payment as described here.

Additional Financial Sources

I know a couple of students who graduated recently with out any student loans. How did they do it, you may ask? It is simple and it can be done. If parents open an RESP account at an early age, that will be great. If not, as a student, you should be able to follow the following simple advice for your own benefit. Try to do all or some of  the following:

  • Apply for bursaries. You will be surprised how many companies are ready to help students. It is up to a student to do a little research and find those companies and apply for bursaries before the expiry dates.
  • Take Transfer Courses. By going to a cheaper college/university and transferring to a better known university in the last year of your studies. For example – if you plan to graduate from BCIT, then go to Douglas or Langara or Kwantlen and take transfer courses, as BCIT courses are twice as expensive as the other colleges.
  • Stay at Home. Most students make mistakes and choose to move out during college years. In fact, that is the time a student needs support. So, stay at home if the institution you attend is in town. This will give you a chance to start ahead of others, as you won’t have much debt upon graduation.
  • Stay Sober at campus. Yes, campus life is great, and students might be tempted to do crazy things – but remember that you have a goal – the goal of getting educated – that should be your priority.
  • Take Public Tansportation. As a student, do you really need expensive car? Do you really need a car at all? Think twice before you buy a car.

For additional information about RESP, check out these links:

Canada Education Savings Program (CESP) Glossary of Terms

Education Savings for a Child

How Does an RESP Work?

My next blog entry will be on Thursday July 2, 2010.

Mullkam Samint!

June 24, 2010 - Posted by | Ethiopian Businesses, Ethiopian Careers, Ethiopian Citizenship, Ethiopian Culture, Ethiopian Education, Ethiopian History, Ethiopian Investments, Ethiopian Media, Ethiopian Parenting, Ethiopian Patriotism, Ethiopian Politics, Ethiopian Professors, Ethiopian Proverbs, Ethiopian Relationships, Ethiopian Socials, Ethiopian Sports, Ethiopians & Technology, Ethiopians Back Home, Ethiopians in Vancouver | , , , ,

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