My three kids chose different educational paths. How do I withdraw RESP funds in a way that’s fair to them and avoids unnecessary taxes?
A. Congrats on thinking ahead, Paul. And you’re correct: There is likely a minimum educational assistance payment (EAP) withdrawal you’ll want to make, which will benefit you both. That amount depends on how fully funded your RESP is.
As a reminder, the EAP is made up of the government grant (up to a maximum of $7,200) and the accumulated earnings on both your contributions and the grant itself…
According to Statistics Canada, the average cost of undergraduate tuition nationally for the 2022/2023 school year was $6,834 per year. The costs can be greater or smaller depending on the program of study, and tuition represents only a portion of the total cost of post-secondary education. In fact, the data shows a four-year university program can cost $96,004 for a student living on campus and $48,074 for a student living at home.
In contrast, the average RESP balance for children aged 14 to 17 was $22,180 at the end of 2019. That’s enough to fund approximately one quarter to one half of the cost of a typical four-year university program. What should parents do to close the gap?
MoneySense’s Student Money Guide
What if the RESP falls short of covering education costs?
Planning for RESP withdrawals can be more art than science…
How to make money as a student
Here are several ways you can earn some extra money on the side while juggling school.
Pick up a part-time job
One of the most common ways to access extra money is having a part-time job. Consider working in retail or at a restaurant, or getting a seasonal job, where you can work at a tourist attraction or resort. Having a summer job is a great way to obtain professional skills while enjoying time off of school and having a lighter course load.
When I was in university, I worked on campus as a teaching assistant and a research assistant…
Investing vs. debt repayment
The financial industry spends a lot more time talking about investing than debt repayment, so that can be an enticement to start building an investment portfolio. Investing has become more gamified as well, and many young people know someone—perhaps indirectly through social media—who has made it rich investing in meme stocks, cryptocurrencies or NFTs. This can lead to a fear of missing out.
The truth is that most investors make money slowly over time, and even the professionals have a tough time keeping pace with stock market returns, let alone beating the market…
According to Statistics Canada, Canadian students enrolled in a full-time undergraduate program shelled out an average of $6,834 in tuition costs for the 2022/2023 academic year, and graduate students paid an average of $7,437. If you live away from home, you might need loans to cover housing costs, too. Over a typical four-year program, that can mean shouldering tens of thousands of dollars of debt.
So, how can you pay off your student loan debt? We break down the types of student loans, repayment strategies, and how you can balance this obligation with other priorities.
How to pay off your student loans
Here are several key factors to consider when making a plan to pay off your student debt.
1. Tally up your student loans
You may have one type of student loan or a mix of a few…