Brendan wrote an interesting comment in the post on Radically Frugal which got me thinking.

What’s with the RESP thing? What happened to kids getting a summer job and paying their own way? Don’t do it, and use the money to enjoy life with your kids before you die, or end up crippled in a care home. A side benefit is your kid would appreciate having to earn his own, an not end up one of these “millennium” babies, having no pride, or work ethic, etc. I know many will disagree, but that is the price of being right.

Seriously, has anyone else noticed the uprising of the “entitled” one entering the workforce?

Google “CBS here come the millennials”, 60 minutes segment that nails our up and coming youth to a tee. And it all starts with the RESP.

There are huge advantages to using RESPs, two of the most significant being:

  1. Tax Free Growth
  2. A government grant of 20% up to $500 per year per child. That’s a pretty good return!

RESPs are a fantastic savings tool for post secondary education. The question I hadn’t considered until now is, should we be saving for our children’s higher education?

I went to school with a guy name Colin whose parents paid for everything. He took 7 years to graduate with a 4 year degree and spent much of that time partying. Heather, on the other hand, whose parents split every school expense with her right down the middle, worked her tail off at university and graduated with top honours. Brian, my husband, took 4 years off after high school and worked as a custodian at a high school making $26,000 / yr back in the late 1980s. He saved up for university and paid for the whole thing with cash. He’s now working on his PhD and has never had a student loan or any help from his family. My parents paid for my first year. After that I worked my way through.

Is there a pattern here or is it a coincidence that the kids who paid their own way worked harder than the kids whose parents paid? Surely there are examples of highly successful people who had their way paid through university. What about all those wildly successful wealthy individuals with trust funds who’ve never had to pay?

We all want what is best for our kids. I’d love for my kids to graduate debt free but I’d also like for them to value their education. One of the best ways of giving value to something is to have them pay for it themselves.

As parents, our first financial goal should be to live in such a way that our children never have to support us. It’s not a wise idea to save for your kid’s university years at the expense of your own retirement savings.

In truth, up until now, if we’d had more money we would have saved more in their RESPs. Every month since they were a few months old we’ve put $100 each into their RESPs. Over time it’s added up but it’s no where near what they’re going to need for higher education in Canada, even if they live at home! Our hope is that it will cover 1/4 to 1/2 their costs and they will have to pay for the rest. We also hope that by paying for part of their higher education with their own hard earned money, they’ll value it more and work harder while they’re there.

At this point I think we may abandon our plans contribute higher amounts to their RESPs as our income increases. We need to focus on maxing out our TFSAs and RRSPs first. After that, if there is some left we may consider adding to their RESPs but will remind ourselves that if we want what’s best for our kids the best gifts we can give them include financially secure parents and the value of a good education.

Should parents be funding their children’s higher education costs if they can afford it? What are your thoughts?

Kathryn works in public relations and training for a non profit. In her off hours, she volunteers as a financial coach helping ordinary Canadians with the basics of money management. Her passions include personal finance and adult education. Kathryn, along with her husband and two children live in Ontario.

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  1. Kirk S. on July 22, 2009 at 8:32 am

    A great topic. My philosophy is that the kids should be at least partly responsible for their education (whether it be 50-50 or the parents pay for the first year or whatever). I believe though that if you aren’t saving for yourself first (aka maxing out your RRSPs and TFSA) that you can’t save to get your kids ahead. If you aren’t doing this, then your kids will be responsible for you as time goes on and the financial burden that you prevented for them now will turn into a future financial burden in supporting you in your retirement.

  2. Melanie Samson on July 22, 2009 at 8:50 am

    I think we need to consider the ever-rising cost of education into this equation. Paying your own way through gets harder and harder as tuition rises much much faster than the cost of living.

    Also keep in mind working is not always an option. Despite some superhumans managing to get straight As and work full-time, most people will take a hit in their grades if they work more than a few hours a week, ruining their chances of grad school or costing extra in summer classes. Considering how expensive it is, people who manage to work enough to pay their way through without loans are pretty rare. Instead, we mortgage our future.

    I got enough scholarships to pay my first year of university and relied upon student loans for the rest. I graduated on time, never failed any courses, didn’t travel or make any large purchases … lived on $20 a week for groceries! Despite all that, and substantial amounts of debt reduction from new government programs, I found myself crippled with dept payments right out of school. I was lucky enough to get a permanent teaching job right away but my loan payments suffocating me. They crippled my budget but I didn’t qualify for interest relief. As a result, I dug myself into credit card debt just to get by. I tried to live cheaply and even got a second job but still couldn’t make ends meet.

    If my parents could have afforded to help me out, I don’t think it would have made me a self-entitled crybaby to be able to start my working life without massive debt. While we’re participating in non-scientific observation, I have three coworkers my age and they are very hardworking, responsible people who had their parents pay much of their way through university (with the help of scholarships and summer jobs).

    I agree with the principle of having students be responsible for their own education. But I don’t think helping your children out will turn them into a monster

  3. Houska on July 22, 2009 at 9:19 am

    Hmm. I’m a 1st generation immigrant (child of immigrants) and I have a bit of a different attitude. In our case, the family’s financial health is and stays a joint family responsibility. So when I was starting University, it was clear all of us were going to work hard to put me through it. Fortunately I was able to live at home and got scholarships well in excess of tuition and other direct expenses. But if not, my parents would have worked harder and scrimped to pay the bulk of the expenses so that I would not have to work too much and take away time from studies.

    There’s the flip side of it as well. My parents came over in their adulthood and have not been able to build up adequate retirement savings. Ergo I now contribute significantly to their retirement.

    Financial attitudes vary from culture to culture, and also from family to family and individual to individual. I try not to be judgemental, but I did find it bizzarre when some of my University friends wasted time and money at University since it wasn’t “they” who were paying for it. But I found it equally bizzare when others were working hours in bad jobs, living poorly, and their parents were making a good income, spending money on a good life, or even just saving for the future when their family needed it there and now to make the most of their studies. In one case my friend was “on his own” working 16-20 hours to make it through the university year, while his parents spent thousands of dollars renovating the house to fit their new “children have left the house” lifestyle. It just struck me as very weird.

  4. Frugal By Nature on July 22, 2009 at 10:13 am

    When I was growing up, there was no such thing as RESP’s, student loans, government grants or forgivable loans, and I certainly wasn’t going to receive any scholorships-I was an average C+ student. We were expected to get a part time job in high school, and start saving. We could live at home, free room and board as long as we were in school, or saving to go. My mom had a copy of my savings passbook which I proudly showed her every payday that I wasn’t spending my education funds away. If we weren’t saving for an education or attending classes, or if we smoked (it worked!) it’s not like paying R&B to them was an option, we were out on our own. My parents paid for the books (which was a bonus I didn’t even know about until she offerred to pay me back) and I paid for the courses. I worked part-time making minimum wage at 3 jobs for 1 1/2 years before attending college, then I worked part-time at 1 job while attending classes. Sometimes it was a full course load, other times it was only half-day classes or even evenings, but the point here is that I earned my way, with my choice of carreer path, and I am most appreciative of the opportunity my parents gave me for the free R&B!! Did I consider it an invasion of privacy showing my mom my pay stubbs and passbook? NO WAY!! The alternative was to be out on my a** on my own! Add it up people, go to school, pay your own way, you earn self-respect, good work ethics and graduate debt-free. It wasn’t a free ride, but I am a better person because of it. BTW: I am 45, and we are retiring in 2 years…………. : )

  5. Caitlin on July 22, 2009 at 10:19 am

    Entitlement is a learned behaviour; it does not magically spring up if your parents pay for your education. If parents teach their kids to be entitled, they will be entitled, no matter who pays for their post-secondary education. I fully agree that some young people are entering the work force expecting to skip past having to pay their dues and assuming they’ll step right into the lifestyle their parents worked for 30 years to achieve. Having no pride or work ethic isn’t something that develops overnight – their parents and society are teaching them to be that way by allowing them to be that way. It starts at home, but not with an RESP.

    My own parents got no financial support from their parents for their post-secondary education. They studied for long hours, and then worked for long hours just to make ends meet (and turn over nearly every cent they made to the university and their landlord). They lived on week-old bologna, two-day old bread, and hot water with ketchup packets squeezed into it (“tomato soup”). It hurt their relationship, and it hurt their grades.
    They swore during that time that they would never make their own kids pay for 100% of schooling costs. And they didn’t – a fact for which I am infinitely grateful.

    As soon as I was born, they started an RESP. I was expected to make up any difference, and expected to come up with any money that I wanted to “play” with. All in all, it probably covered about half of what my education and living expenses were (closest university to our town was 3 hours away – living at home wasn’t even an option). They taught me responsibility and gratitude, and they taught me how much hard work goes into every dollar you spend long before I went to university. They helped pay for everything they could, and I still ended up graduation with about $13k in student debt (and no, it’s not from partying my money away, it’s from tuition costs and basic living expenses). I am thankful for the help they were able to provide, not lazy because they helped me.

    If Brendan thinks that “getting summer jobs” will fully pay for post-secondary education, I’d like to know what decade he’s living in. Ensuring your children graduate with $10k, $20k, $40k+ in debt doesn’t help make them self-reliant, it makes them crippled by debt before they even have a chance to start their adult life.
    As for saving the money for your own retirement, good plan. Your kids certainly won’t help you out in your old age; you have taught them not to help those in need financially.

  6. Ramona on July 22, 2009 at 10:20 am

    Yep, I’m a big fan of the fact that when you pay for things, you appreciate them. It may not be true in every single case, but I’ve certainly seen enough of it in my work life. Those that pay themselves appreciate what they get, those getting a free ride place little value on the outcome. Time and time again. My plans are to have my son partner with us for his education. We will help, but it will not be a free ride. Entitlement is not the attitude I wish my son to acquire.

  7. Novice on July 22, 2009 at 10:37 am

    I was able to pay my way through university, through a combination of loans (which I paid back), scholarships and straight old fashioned work.

    However, for our son, we have started an RESP. My intentions are to tell him that we will pay for his tuition, subject to certain conditions – in other words, he will sign a contract in much the same way that I signed one when I received my student loans. I will expect him to attend class and work hard, and failure to do well in one year will mean less funding for the next year, to the point of $0. If it’s not important to him, it’s not important to me, kind of approach. I also want him to make time for the non academic parts of university — the sports, girls, beer, hopefully not drugs, the good times basically. University shouldn’t be all work + study. But he’d better not get a girl pregnant!

    I think that the idea of kids paying their way through university is quite difficult, and it’s been 11 years since I graduated university and now you have adults competing for summer jobs — at my company, we haven’t hired a summer student for the past 2 years, so what are they supposed to do? That said, if my son isn’t working in the summer he’ll be working for good ole dad. Luckily for him, he’s only 2 so I’ve decided to cut him some slack.

  8. DG on July 22, 2009 at 10:40 am

    Contributing to an RESP does not have to compromise funding of your retirement. Only the CESG and growth is committed to educational use; the original contribution comes out tax free with no strings attached, and can go back into your retirement fund.


  9. F on July 22, 2009 at 11:03 am

    I think Houska makes a good point, the problem of paying for the Childs university fee’s tends to bring out the problems mentioned because of several reasons. The first is that the child does not feel that the money is theirs. And that comes from the messed up relationship I see in a lot of Canadian kids and their parents. There seems to be a divide that is built at a young age where the parents care about their own selfish intrests and child should care about themselves too. This can even lead to the point where the parents will sucker their kids into giving them money and vise versa (as though they are playing on different teams). When there is no community or family the child will obviously feel no responsibility for the money as it would be equivalent to a stranger giving them that money. The problem comes from there not being a feeling of mutual responsablity between the parents and the kids. The parents should try and give the child a debt free start in life at any coast to their financial future (an investment in to your child) the child will see this hard work and feel responsible for the money even more-so as it is not theres but rather their loved ones hard work and should thus feel responsible to pay that debt back when and if the parents come into a situation also of financial need such as retirement. From there comes the relationship that a family should have. It should be a team effort. When the child dose not see the parents as an extension of themselves in a way, they will not feel responsible for wasting their efforts. Canadian kids and their parents I find are very rude to each other and don’t act like a family at all. Take my girlfriends situation for example, she needs to pay her way through university that her parents refuse to pay for as they would rather continue to spend the extra money on crap like driving from their own home to go out and by coffee from Tim Hortons. Though out all this the mother is a stay at home mom with nothing to do but watch TV all day, not willing to put in a few hours a day to help her only child out. Furthermore upon graduation she will also need to pay rent to her own parents to live in the house as “she needs to understand she can’t live anywhere for free” (apparently she will have not learnt enough about money with the $40 000 loan soon to hanging over her head). Ironically though she is living with me now (free of charge). Now me on the other hand is getting paid through university completely including the apartment close to my university which is extravagant considering I’m only one and a half hour commute from my house. But I feel a deep responsibility for the money that my parents have put out. They only ask of one thing, and that is that I get a good education (which I am). They have sacrificed their retirement so that I could put more effort into my studies. This I understand clearly both as I see it every day and since they have explained this to me. During the summers I always work at a job to pay for text books and living expenses for the following year. I know that my parents have provided me with a gift that could potentially cost them a bit. But in the future, if they come across any money issues I sure as hell will be the first to help them out as the job I will get off the education will hopefully provide enough.

  10. BenS on July 22, 2009 at 11:09 am

    My wife and I are contributing to RESPs for our three kids. Our plan is to have the kids pay for their schooling initially but as they successfully complete each term, we’ll reimburse part or all of it. The goal is to allow them to focus on schooling, but not be “guaranteed” a free-ride without earning it.

  11. O.H. on July 22, 2009 at 11:20 am

    I agree with the sentiment that you appreciate something more if you pay for it. Is it generally and universally true? Maybe not. But for the most part, I believe it is.

    I do think, however, that what a student does to ‘pay’ for their education can be more than simply monetary. If, as a parent, I see my child working diligently on their studies, spending all the time appropriate to do a good job, and trying to maintain good grades or improve on those that need to be improved, that is acceptable ‘work’ for a student. If I have the means, I would love to support them.

    However, a student can also demonstrate their appreciation by chipping in to alleviate the financial burden. I know not everyone is able to get good enough grades for a scholarship (even in part), and to maintain the scholarship with good grades (if that applies), but there are other things a student can do to demonstrate that. They can search and apply diligently for bursaries, grants, etc… Since they have around 4 months off during the summer, how much are they working to offset the cost (or pay for most of it)? This is the kind of things parents should look for in their child to determine what level of appreciation they’ll have for financial support.

    And for what it’s worth, I didn’t receive a dime from my parents for post-secondary school (summer jobs working in construction paid for most, with some scholarship, and little debt that took 6 months post graduation to pay off) – HOWEVER, my now wife, who didn’t PAY a dime for her education, worked a heck of a lot harder than I did!! So a person’s character must be considered in the mix as well.

    Isn’t that what parenting is all about?

    Good discussion topic.

  12. O.H. on July 22, 2009 at 11:25 am

    @BenS: Will you let your children know there is a fund waiting for them? Or will you look and see what level of effort is placed before financially rewarding them, lest they just be lazy because they know a safety net WILL be given?

    I don’t have an opinion either way, just curious.

  13. Tom on July 22, 2009 at 11:27 am

    Having recently graduated from university I thought that I would put my two cents in.

    In my opinion there are a few things to keep in mind:
    1. as mentioned before the cost of university has gone up much faster than inflation
    2. 50 years ago a university degree was nearly a guarantee to a well paying job. That is no longer the case today. Now a degree is a necessary but hardly sufficient to obtaining a good job. Many, perhaps the majority of university graduates, will be likely to get anything better than a minimum wage job.
    3. I personally could not imagine graduating right now with an arts degree (which are the majority of degrees at most universities) into a massive recession competing against much more experienced employees, while baby-boomers who can no longer afford to retire are preventing upward mobility.
    4. Not all degrees have the same workload. Being in Computer Science and having many friends in Engineering, I don’t know a single one of us who is/or could take a full course load while working even part-time and get good grades. This is a bit different than the humanities. I consistently work more hours during university than I have ever been called on to do at work.

    For my part, my parents paid for my whole education and living expenses but nothing more. I worked every summer so that I could afford to have any kind of a personal life. My parents made it clear that they were paying for four years of education and that was it. At the university that I went to, one of Canada’s hardest, it is very common to take at least one extra semester. Taking a full course load while maintaining a good GPA (without ever dropping anything is very, very difficult). Not that I needed any extra incentives to work hard but this was a good one. I was living in Toronto, which is not where my parents live, so there was no way I could afford to pay my living and expenses and tuition out of my own earnings. I had to stay on track so that I could finish in four years.

    In first year when I lived in residence I saw a lot of kids who were just wasting their parents money. Most of them had parents who were never around and who were financially irresponsible themselves. I find it ironic listening to all these baby-boomers talk about how entitled the millennials while they themselves have been living beyond their means for so long (causing the financial crisis). Kids learned this behavior from somewhere.

    After first year, I lived off campus which was a very good learning experience. Paying the bills myself (although with my parents money) allowed me to learn just how expensive all the things I took for granted were and how much work was involved in food preparation and cleaning. After that was it ever nice to visit my parents on the weekend where I might get a meal cooked for me which was much better than anything I could create myself. I would highly suggest not having your kids live in residence after first year so they can learn these lessons.

    Anyway, I graduated on-time and landed a decent job in the IT sector. I supported my girlfriend financially while she finished her degree. My girlfriend, whose parents didn’t pay for all her education but allowed her to live free at home gave me another interesting perspective on this topic. When we moved in together she complained about how small my (now our) apartment was. It is in fact not small for an apartment and is on the top floor of a complex across the street from Lawrence park. Much nicer than the year I spent living out of a $400 room while sharing the only bathroom with the 77 year old landlady (no shower, only a tub). After she graduated and got a job I started including her in our expenses and she had no idea how expensive living on your own actually is. After doing our first every grocery run where we were paying together, she turned to me and said “Is this how much we spend on groceries _every_ week.” For the record my girlfriend is very financially responsible and is the one who, by her example, got me starting saving more.

    Anyway, in conclusion I am very grateful to my parents for paying for my education. It is by far the best gift that I have ever been given. I never could have done a full course load while doing such a demanding program as Computer Science. Living on my own in off-campus housing was a very, very useful exercise for becoming a responsible adult. Thinking that paying for someones education will be the deciding factor in how responsible someone is is ridiculous over simplification. I think most of those behaviors are learned at a much younger age and reinforced long before university. Most of the irresponsible young adults I know were enabled by their parents at every step along the way as they grew up. How do you expect your children to value money and be responsible if they always give yourself and them everything they want, exactly when they want it by loading up on debt?

  14. Julie on July 22, 2009 at 11:34 am

    My greatest issue with RESP’s is that once you cash them out and use them for tuition they are gone. That’s it. None left for me. When my kids were very young I was a single parent looking for ways to stretch my $$. Saving that small bit of money every month was a big challenge and I was admittedly bitter that I would never see the benefit of the sacrifice. It just seemed so unproductive. So instead of putting the money into an RESP I continued to save a bit every month, got a big (to me at the time) income tax refund and bought a little condo that I have rented out since then. My thinking was (and is) that until my kids are ready for university the tenant will be paying into my alternative education savings fund by paying down the mortgage. I will be 45 when they are ready to go to school and at that time I will remortgage the property to help with their education. Then for the next 20 yrs the tenant will be contributing to my retirement every month by paying down the mortgage again.

  15. cannon_fodder on July 22, 2009 at 11:36 am

    Is there a better investment than investing in your own children? While I was fortunate to live at home through most of my university days and have scholarships take care of all expenses, I would have fully expected that my parents would offer to help but with the proviso that I also contribute.

    I worked before university to save up and during the 1st year. Then in the summers I was a research assistant in my department. I easily made enough to support myself even if I had no scholarships and chosen to live in an apartment. Thus, it is unfortunate that apparently kids today can’t make that happen on their own.

    I think Caitlin made a great point – if kids will feel entitled by receiving this ‘handout’ then I suspect that behaviour was in place before they entered university.

    I also like several posters suggesting an agreement in place between the child and the parents that almost reflect a scholarship mentality. In other words, if certain performance metrics aren’t attained then the flow of funds will stop. And, as DG aptly pointed out, you can always take most of the money back if they don’t like it.

    As a parent, I’ve always felt I’d like to give my child more opportunities than I was given. My parents certainly did that for me. But, at the same time, part of growing up is learning responsibility. It took fiscal responsibility for parents to put the money into an RESP – it should then be a chance for the child to demonstrate personal responsibility in earning the use of that money.

    I’ve told my daughter (who is 3 years away from university) that the money is to help her go to university. If she wants to enroll in a more expensive program, or move away to attend a different university then she will have to pick up the slack. And I’ve told her that this is one of the goals of a part time job – to earn and save money to help further your path in life. Such experiences often mean sacrifices and how much you are willing to sacrifice is probably directly related to how much you want to achieve.

  16. cacp on July 22, 2009 at 11:51 am

    My parents were exceptionally great to me (looking back). In grade school to middleschool they had a grade for pay system where they would pay me my semester average in $$. So 80% = $80. As a kid this is big money in a world where you either need to wait for birthday/xmas for a gift or work chores/save allowance in order to buy funtoys.

    In college my parents didn’t help me but bailed me out whenever I got in trouble (aka miscalculated tax deductions and hit with a $3k tax bill). But since I paid my way through undergrad and then law school I graduated with $70k worth of debt. This was a major anchor which would prevent me from buying a house to live in for 5-7yrs. Fortunatly again my parents decided to help out with a “back end grant.” After I graduated they helped me pay off my student loans to minimize the crippling 8.5% interest rate. They said I didn’t need to pay them back but I feel guilty for it and will pay them back once established with interest.

    For my kids I will probably do the same growing up but continue the cash for grades idea solely for college tuition. They will have to find a way to pay for cost of living.

    For myself, my tuition doubled inside of 5yrs and the rate seems to be increasing. 1yr law/med school is $15/20k depending on the school. without help at these higher levels it becomes nearly impossible to reach the next level.

    All in all I’m very grateful to my parents for their help and definatly could not reach where I am without their support.

  17. Sean on July 22, 2009 at 11:53 am

    I don’t have kids yet, but when I do, I will definitely be maximizing the benefit of an RESP for them.

    I don’t think that there’s any correlation between a student’s work ethic, and who pays for their education. In my opinon, a lot of comes down to parenting, and what is installed in children. It goes two ways: you can write them a cheque unconditionally, or you can let them know that your help requires their commitment to working hard and succeeding in their studies.

    Coming out of University with a heavy debt load is quite a financial burden, and I’d like to see my kids get a faster start to their post educational lives without being saddled with large monthly student-loan payments like I am.

  18. guinness416 on July 22, 2009 at 11:57 am

    These types oif threads generally devolve into competing anecdotes, which is interesting but not all that meaningful. I honestly think this whole awful “pesky kids won’t appreciate their education unless they contribute, I walked both ways in bare feet in the snow every day to school each day so I know” meme that exists in the money blogosphere is pull-yer-socks-up garbage. And I say that as someone who both worked nights and took a high stress, long hours degree (architecture) so I have the dubious cred. If you don’t feel you can or will fund your kids’ education more power to you for making that decision – especially if that means you’re not going to micromanage and helicopter parent their university career – but I never saw any connection between those whose parents supported them more and being a bum or having fantastic marks when I was at university, and there certainly isn’t a connection in terms of career or personal success 10 years out. I just don’t buy it. Almost all kids are going to booze it up at college (I would hope) and almost all kids will find their way a few years after graduation regardless of parental support.

  19. James on July 22, 2009 at 12:03 pm

    I plan on paying for my kids education. My parents paid for my first degree years ago, and I plan on doing at least the same for my kids. I grow up in a family where the family as a whole is considered, rather than parents & kids separately. My wife and I are willing to sacrifice/work overtime/multiple jobs/whatever to get the kids where they need to go.

  20. Kent on July 22, 2009 at 12:13 pm

    I believe that RESPs are a very important part of a family’s financial plan. When you combine the growing costs of post-secondary education with the ever increasing cost of living and a students ability to earn reasonable wages in university you have a toxic combination. What happens is a generation that is leaving university in debt, even if they work while in university. The debt levels of the current post-secondary grads are enough to prevent them from qualifying for mortgages, car loans and re-payment of the debt can drastically hamper their quality of living.

    The originally comment read: “Don’t do it, and use the money to enjoy life with your kids before you die, or end up crippled in a care home.” A wonderfully imflamatory comment, but I doubt that $50 to $100 per month is enough to highly impact your current quality of living.

    The person also said: “A side benefit is your kid would appreciate having to earn his own, an not end up one of these “millennium” babies, having no pride, or work ethic, etc. I know many will disagree, but that is the price of being right.” Not agreeing with this person is not the cost of them being right, it is the cost of their ignorance. To suggest that the only things that determine a person’s level of pride or work ethic are economic and financial matters is horribly misleading. In fact, it sounds like a cop out. If you do a good job raising your kids, even if you cover a part of or their full university tuition, I doubt they will have little pride or work ethic.

    Do your job as a parent, raise your children well and help them as much as reasonable with their post-secondary education and your child will not end up an lazy good for nothing brat of a kid. They will end up well adjusted, respectful, educated and will have you to thank for starting their life on a solid financial footing.


  21. Stephen on July 22, 2009 at 12:17 pm

    Cannon_fodder and Caitlin are absolutely correct. Paying for your child’s education in no way effects their performance in school. This decision was made years ago; kid’s have to be instilled with the sense of responsibility from an early age.

    I graduated from University 1 year ago and went to school these so called “millennials” and have seen it first had. I will tell that there is zero correlation between who pays for school and academic performance. The determining factor is the maturity, motivation and sense of responsibility. These things were determined by the parents years ago.

    Another recurring theme I saw was parent’s who railroaded their kids into University. The parent’s had saved the money and damn it their kid was going to University at all costs. The kids weren’t emotionally ready or had no real interest in the material.

    I personally know upwards of a dozen people that ended up dropping out because their parents pushed them into University but it just wasn’t for them. Most of them went on to be successful in so called “less glamors fields” such as apprenticeships, vocational schools and even such things as paramedics. People need to realize that there are so many great career options beyond university.

    University is something that your child must be excited and motivated for. If they are, it doesn’t matter who pays; they will succeed!

    Full disclosure: I have a degree in electrical engineering that my parents payed all the tuition and graduated near the top of my class.

  22. Kathryn on July 22, 2009 at 12:26 pm

    Stephen: You bring up an excellent point when you say, “University is something that your child must be excited and motivated for. If they are, it doesn’t matter who pays: they will succeed!” Internal motivation is by far a greater determiner of success than who pays the bills.

    It is my understanding that RESPs can be used towards almost any post secondary training whether it’s paramedic training, electrical, plumbing or photography. Any know the specifics of the rules off hand?

    I see my role as a parent, not to push them towards higher education but to help them find their passions and encourage them on their journey towards what they want to do with their lives.

  23. M Hawk on July 22, 2009 at 12:30 pm

    I would have to say it’s part parenting, but mostly behaviour. I’m 25, the youngest of three kids, and going back to school. My first degree was paid for by my parents, but I don’t think I slacked off at all because of it. One older sibling still lives with my parents, my mom still makes her lunches and still pays for her car (enabling her behaviour, perhaps). The other shunned all help from about age 18 on and suffered through debt (unneccesarily, as my parents would have helped) just so she could call herself self-made. That’s personality, not parenting, and a bit stupid I think.

    I agree that if you have to work for it, you appreciate it. However, I think people will learn that lesson at some point anyways (unless the parents NEVER cut off the $$, or the child decides to refuse it)… and you could save them a couple grand in the meantime.

  24. Henry on July 22, 2009 at 12:33 pm

    From what I have seen and I have heard, a person with a large RESP account cannot get first year or even second year student loans and government grants.

    A possible alternative to student loans or heavy parental support is this for people with decent high school grades. Apply to both 1st tier and 2nd tier universities with decent programs that the person is interested in. 1st tier university usually will give a basic entrance scholarship, while 2nd tier university may give a full scholarship for 4 years that include residence and living cost. By going to a 2nd tier university with full scholarship, this may decrease the financial stress and get a better grade due to less competition. The assumption here is that graduate school is more important than undergraduate degree. I would like feedback on this idea.

  25. Sampson on July 22, 2009 at 1:06 pm

    What a great discussion! Great topic Kathryn.

    I agree with the sentiment that children have their values instilled upon them before they go to University – whomever pays for it has nothing to do with this.

    I have 2 points to add.

    1. Funding your own retirement vs. giving to your children. I’m not sure why this is such a prevalent mentality among North American families. My parents are immigrants to Canada and we have a very strong sense of a tight knit family. Anything they can contribute to my happiness gives them double in return. Also, the amount saved for a University education is peanuts compared to what someone needs to retire. – buy one less new car over your lifetime and you’ve almost got it covered.

    2. What if you kid gets accepted into an Ivy League school. Its great to send your kid to University, but as many people point out, parents want the BEST for their children (most do). If you child gets accepted into Harvard, I’m sure you’ll be happy you maxed out those RESPs.

  26. jp on July 22, 2009 at 1:54 pm

    With the rising cost of tuition I think saving for a RESP is a very good thing. Should our children start life in greater debt than any other generation? More and more are avoiding higher education because of this.

    I paid my way through school and received scholarships because I didn’t have anyone to count on. Many programs like art and medicine require far more money than is available through student loans. It is good to expect kids to work and save for school themselves, but nobody can predict what the job market will be for them in 20 years time, or if they are motivated to gather other life experience.
    What if they have a genius for something like music, or something that may not show immediate financial reward? Should we expect them to waste their gifts or give up other opportunities to work in an office? Perhaps they will need extra money for an ivy league. Who knows what they future will bring?

    I know of the kids who wasted time in school while I busy working and winning scholarships (such as there were at the time), but I’m not certain these individuals would have lacked motivation anyway. There were also those who wasted loans, and those who were not eligible for loans because of their parents income level. Many wanted to make their parents proud, and were fully aware of the sacrifice that had been made for them.

    One of the reasons we are motivated to stay in the north is because college tuition will be covered for each year we live here, and I don’t want my children to start life with more than hundred thousand dollars worth of debt a piece. Than being said anything could change and we want to be prepared.

    Teaching motivation and responsibility should start long before college, and perhaps it should be a group effort.

  27. Brendan on July 22, 2009 at 2:00 pm

    I must say I am humbled that a comment I made inspired a blog. And here i thought I was gonna be slammed for it.
    It seems most people agree with me.
    I would like to clarify that i do not see anything wrong per say with helping out. It certainly is not my business how you raise your children.
    I do have a problem with how the RESP is marketed in that it is an obligation and responsibility for a parent to pay their childs way.
    If you can help out then fine, but not at the expense of delaying retirement, or enjoying life.
    My dad will still ask me whenever he buys anything, “so, what do you think of your inheritance?”
    We laugh.
    At the same time my parents helped out in other ways, not paying for any schooling.
    When I graduated high school I got a job as a caretaker for a school division. I was making very good union wages, especially for an 18 year old kid.
    As for rent while still living at home I had 2 choices. I could piss all my cash away at the bar, and pay rent, or if I could show my parents that I was saving money to build an RSP and house downpayment, my rent was free.
    Pretty easy decision although I admit trying to brag about your RSP contribution to your friends after they come back from Mexico is a tough sell.
    I am forever greatful to my parents for giving me this opportunity to learn to save.
    I dont have kids so I can sit back and “tell it like it is” without bias. Some people get real defensive when i talk about child raising.
    I have 2 sisters and 5 nephews. One hates me for being an ass, and the other likes when I point out when she is becoming a “helicopter parent” (hovering/smothering over your child, like you are the ONLY person on the planet to have a kid).
    Both sisters used to use antibacterial soap, never let their kids eat mud, play in the dirt, go outside when it is starting to “spit”, etc.
    After my emergency intervention, one still is a helicopter parent, ant the other is more relaxed.
    Guess who has spawn of satan as kids who dont listen, are ALWYS sick, and break everything?
    Guess who has more behaved kids.
    We all want bigger and better for our kids than we had, but at what cost?

    I agree with Caitlyn with things starting at home NOT the RESP but I can almost guarantee if a child has an RESP he/she has also always been pampered, and silver spooned, driven 2 blocks to school, etc.

    Speaking of which there are parents on my street who pick their kids at the school bus drop off and drive them home 11, yes 11 houses down.

    This same parent was wondering why her daughter was heavier then the other kids her age. She was mad when I asked if maybe driving her home was contributing?

    I degree.

  28. AndrewP on July 22, 2009 at 2:04 pm

    Reading this article boiled my blood!!!

    I am a 24 year-old professional. Married with a kid on the way.
    My post-secondary education was paid for by my parents…100% I didn’t pay for books, tuition, anything! I lived at home and went to university…graduated Cum Laude from Aerospace Engineering with Co-op.

    I worked hard for two reasons:
    • I knew that having my education paid for was a special privilege that I should not take for granted, and
    • I had to make sure I would be able to support my wife (who I married before finishing school) with a well-paying job.

    Being lazy, or a party animal, or taking advantage of your parents’ generosity is a mindset which comes from how you were raised and the values with which you were instilled.
    Raising your kids right would ensure that they won’t be lazy. By the time they’re 17, and you’re faced with actually paying up for their post-secondary, parents are not going to change their children’s attitudes!!! The 17 years prior have a little more to do with that.

    The more important issues that have molded this (lazy and self-entitled) generation of kids:
    • Parents not taking a paycut (and having someone else raise your own kids), in order to live more luxuriously
    • Divorce.

  29. Christine on July 22, 2009 at 2:38 pm

    We save for our children’s future – but we aren’t yet sure whether that means paying for their education, helping them buy property, helping them invest, get married, travel, pay taxes etc.. etc..

    They are too young to understand about money so they don’t “know” we are putting away for them.

    What we both want is for our kids to be financially free – just as we want to be / are working towards.

    We do not have the magic secret to raising financially responsible people and think it’s too early to know when this money will be used and how.

    All we know is if we have lots saved, there are choices and options.

    Maybe in the end we’ll use it for ourselves, maybe it will go to our kids.

    All we know is we hope to be able to provide freedom to our children and have our fingers crossed we’ve raised them well and that if we give them money they have an understanding how to use it, understand the gift and ultimately achieve their goals.

    Our worst nightmare would be to see it pissed away at university parties or spent on ‘stuff’.

    So wish us luck!

  30. Lakedweller on July 22, 2009 at 2:47 pm

    Ft, are you running a parenting blog or a financial blog? ;) Great discussion.
    I almost don’t feel the need to add anything further as Stephen, Caitlan, cacp and cannon_fodder hit most of the points I thought of whuile reading this post.
    My goal as a parent is to offer a world of opportunities to my children. If having the RESP will help expand the number of opportunities they will consider then it will be worth it.
    I will tell them at a young age to dream big, and then we will work together to achieve the goals they have.

    A couple of other points, from a personal finance perspective. An RESP could act as a down payment on an apartment that your child would live in while attending their post secondary education in another city. It could be a down payment on the welding truck to start their own business. The point is, it can provide an investment vehicle for your “adult” (child).

    Regardless of how the RESP is intended to be used by you or your child, the discussion about the endowment (“the money”) should occur years in advance, giving you and your child the opportunity to explore the topics of personal finance (how it was saved), investments (how it grew), the value of education (how it will be spent), and the endless potential that we are blessed with in North America (how education opens doors). If they know that their hard work can lead to unlimited success, the worry about whether or not they will appreciate a hand up is insignificant.

  31. Frugalgirl on July 22, 2009 at 2:55 pm

    I got $ 1,000 a year from my father for education for 4 years I ended up with $10,000 in debt and after starting work I paid it off within 6 months. I believe I worked harder and got a better job then my friends who had it paid for.

    I have also developed saving happens at a student and I still use them today to be able to save a good % of my pay check.

  32. Astrid on July 22, 2009 at 2:59 pm

    Absolutely. I think it’s incredibly selfish of parents not to pay for their child’s education IF they can afford it. My parents paid for college and graduate school for me and I am eternally grateful to them for all their support. When I see the enormous debt my colleagues are carrying – some more than their annual salaries, it makes me value my parents all the more. When I found out how much college was going to cost, I asked my father if I should try applying for financial aid. He told me that he and my mother had been putting away money all these years in anticipation of this day and nothing would make them happier than to see me graduate. And I did in four years with top honors. I am fortunate that my parents had the means and desire to pay for higher education.

  33. Cam Birch on July 22, 2009 at 3:10 pm

    I am considering using the RESP system as a financial teaching tool for my kids. I want them to be involved in the decisions made for their schooling and education so I am looking at investing in a similar fashion as I would for my retirement. The difference is I am planning on having my children take part in making those investment decisions with a portion of their educational money. This way I am saving for their education which is getting ever more expensive all the time and trying to teach them the responsibility they will need to be able to succeed.

    I think that earning what you have in life makes it matter far more to you than it ever could otherwise. So I want my kids to be involved in the earning of their education from the start.

    Of those people I know who had their education completely paid for I find that most squandered their education. Either by not commiting themselves to it or dropping out or choosing a path that was not right for them. I am hoping to combat that by not forcing University and attempting to ensure that they understand how imporant hard work really is.

    The other thing is that they will fully understand that wasting their education by not working hard will earn them a cardboard box on the street. I want my children to have the best in life, but I don’t want to give to them so much that they are being hurt by my generousity. It is going to be a hard line to draw, but it will be worth it in the end when my children are quite successful at what they decided to do.

  34. Brendan on July 22, 2009 at 3:33 pm

    Cambirch, you sound just like Warren Buffet.
    His comments on how much to leave his children were:

    “not so much that they didnt have to do anything, but enough that they could do anything they wanted to do”

    You do not want to raise a Paris Hilton, but you also want your kids to have opportunities to do what they aspire to do.

    Personally, I think university is over rated, and too much emphasis is placed on the degree.
    My dad would ask what we wanted to do. The goal determines the path.
    Many of my friends have arts degrees, or teaching degrees and do not work in their fields.

    If you want to be a plumber you dont go to university. Want to be a dentist, then yes you need a degree. Don’t just get a degree because you think that you need a degree.

  35. Tom @ Canadian Finance Blog on July 22, 2009 at 3:53 pm

    I agree with Kathryn’s decision that while RESPs are a worthwhile investment, they should probably come after RRSPs and TFSAs are taken care of. Not only to make sure you’re financially set, but also since RESPs are the most restrictive of the 3 tax shelters. You could just as easily help your child out from your TFSA if needed.

    That said, the Canada Education Savings Grant (CESG) is a nice bonus and I just wrote a post this week about an extra grant for RESPs for Albertans, the Alberta Centennial Education Savings (ACES) Plan…

  36. Krista on July 22, 2009 at 4:44 pm

    There are a couple of other things to consider:

    1. School is a full time job. For a good student (in high school) it’s at least a 50 hour per week committment. Summer jobs are one thing, but how fair/realistic is it to ask a teenager to add 20 more hours of work to that to contribute to future schooling?

    2. You can teach your kids a work ethic by teaching them to give school their 100% effort. If they can do that and serve pizza too for extra cash, then great, but if not I wouldn’t make the pizza the priority.

    3. Further to #2: if letting them concentrate on their studies (and/or sports and/or volunteer work etc.) creates a possiblity of scholarships that wouldn’t otherwise exist, then aren’t they contributing anyway? Why do they have to pay by serving the pizza?

    4. Why do we feel the only way to have them pay is by saying “you’re responsible for 1/2” (or whatever number)? That system doesn’t take into account their earning potential, which differs dramatically from one town to the next. Why not instead tell them that 1/2 of whatever paycheck they do bring home goes into their RESP? Then they’re legitimately contributing, but they’re not saddled with the stress of having to come up with $16,000 (1/2 of the current cost of tuition and books for a science degree at Guelph) at the age of 17.

  37. cannon_fodder on July 22, 2009 at 6:12 pm

    I don’t have a good idea of how much tuition costs now for a ‘general’ program.

    Krista – are you saying that if someone were to attend Guelph this September, they would have to plunk down $32,000 over 4 years to pay just for tuition, books and activity fees? Lodging, food, entertainment etc. would be, of course, additional.

    That’s incredible if I’ve understood you correctly! 25 years ago a 4 year BSc from UWO with books cost less than $6k!!! And, as some have argued, the value of a university degree back then might have had more prestige (translatable into better paying jobs) since it wasn’t as common.

  38. Krista on July 22, 2009 at 6:52 pm

    That’s right Cannon, semesterly tuition and student fees are $3000. When I attended I could count on another $1000 in books/lab fees per semester – and that was almost 10 years ago!

    The cheapest residence option (a triple room) is another $4000 per year. Add to that the mandatory meal plan (for students in res) of $3000 per year… all before you buy soap or toothpaste.

    I’m all for teaching kids to earn things themselves, but to get that kind of money either requires saving for years (and years and years) or student debt. And unfortunately, the government doesn’t think parents should be able to choose not to pay – student loan eligibility is based largely on parental income, whether they’re actually helping with the fees or not.

  39. Houska on July 22, 2009 at 8:08 pm

    Let me add a topic on the table, somewhat related. It’s been a decade since I finished my degree, so reality may have changed by then.

    If you went to a public Canadian university, tuition and expenses were what they were, and financial support was a mixture of scholarships (for good students), bursaries (need based), loans, and work. There was clear benefit to having saved up for education, whether it was you or your parents who contributed.

    However, if you went to a top-notch Ivy League school, tuition was exorbitant and except if your family was very rich, you got a package of needs-based financial support calculated so as to make up the difference to what you and your family could barely afford. This was based on an examination of your parents’ incomes, family situation (# of children, etc.) and assets.

    This strikes me as a perverse disincentive to save. Suppose I’m confident my 10 year old Einstein will go to a top-notch private college in 8 years. Then any money I’m saving, putting aside for retirement, or paying down on my mortgage will be clawed back in his financial support package. Unless I will have assets in excess of the exorbitant tuition (can be $40-50k per year), I know I will need to rebuild for my retirement once Einstein finishes no matter what. So why not spend like crazy or invest in illiquid assets like home renovations/upgrades, gold jewellry, etc. rather than saving in RESPs or for retirement?

    Comments? The devil may be in the details or this may be out of date…but disturbing if true.

  40. epps on July 22, 2009 at 8:46 pm

    cannon_fodder –

    Back when I graduated in 07, a regular 5 course semester was $2487 for my 4 year BSci undergrad degree. The fees for the same program are now $3076 per semester so around $25k in total for tuition alone.

  41. FirstGenerationWealth on July 22, 2009 at 8:49 pm

    One huge factor to think about is people who have been developing their financial picture over the last 10-20 years and are thinking about their childrens education costs need to realize things are very different from when they went through it. A conservative cost of education in canada is anywhere from $40-$60K all said and done. If you are working full time during the summer and part time during school your not going to get very far on minimum wage. I did not have 1 penny paid for my education and now I am a financial advisor for the biggest bank in Canada and cant debt service a twinky letalone a condo in vancouver.

    People going through this 10 years ago wernt exposed to nearly the current housing conditions first time home buyers are today. Historically high rates aside, a $100K home vs a $500K falling down fixer upper is a huge difference. Even if your lucky enough to get a great paying job post University, the job market is so over flooded with educated under skilled individuals that your fighting for everything.

    Personally I have every intention of saving everything I amable to without subjecting myself to poor long term planning to my childrens RESP. A major caveat being they are serious about their education. If they want to party and bring home C’s they can flip burgers for tuition.

    Sound financial upbringing and the importance of not wasting time or money and thinking long term even in the wee years will give your children the foundation to respect the gift of a free and clear degree.

  42. Melanie Samson on July 23, 2009 at 2:12 pm

    Several people have raised the good point about not qualifying for loans. If you refuse to pay for your child’s education even though you can afford it, you may be creating a substantial obstical to their access to education at all.

    If they can’t find a high-paying job to pay their way through and can’t get a loan, they will be waiting a long time before they can go, if they end up going at all.

  43. Lakedweller on July 23, 2009 at 4:16 pm

    First Generation Wealth brought up my point about considering better ways to invest in your children’s future. It may be debatable about whether the real estate market will stay where it is in 15 years and first time home buyers will have the same high prices that exist today, but the concept of providing housing options for your children seems just as relevant as education.

    That is a good topic for further discusssion: Purchasing a rental property when your child is born and gifting it to them at age 18, versus contributing the same amount to RESPs. Its full of assumptions but I prefer the first in times when there is no logic in the stockmarket direction.

    We have been able to do both for our three children. We have maximized our contributions to RESPs and purchased a very small rental property for each child. It worked while the market was going up and we could use the equity from one to pay the downpayment on the next. Thankfully we aren’t having any more kids, because our ability to scrap up down payments has been drastically impacted by real estate prices.

  44. 32 on July 23, 2009 at 6:27 pm

    My husband and I do contribute to an RESP but we have also decided that our children should also be partially responsible for their education.

    If you teach your children love, respect and responsibility, they will not become spoiled when you pay for their education at 18. If they are that way, they have been on that road for 18 years.

    I think this RESP discussion is really part of a bigger discussion re: money and parenting. Parents need to lead by example (good money habits, not keeping up with the Joneses) and, well, parent (teach kids about money, say no to excess for their kids, don’t use their kids to compete with others)!

    I see all these 16 year girls with a Coach bag. I am 32, made >$90k last year and I don’t have a Coach bag. We do have “fun” money but we are saving up for bigger financial goals.

  45. Janine on July 24, 2009 at 11:22 am

    I think once parents can afford to do so it should be done. However, as parents we know our children. I cannot keep paying for a course that my child is failing and that is where I would leave him to pay for any course that he may have to do over. If that means working to do it, then so be it.

    I have had to pay my way for my education and yes it harder but you do in fact value it more. So, while I understand the need to save towards my retirement and not have to be dependent on my kids, I also understand how competitive it is and our kids would need to be forearmed, so to speak.

    There are a lot of pros and cons to funding our children’s higher education but i think with everything a balance should be struck.

  46. RB on July 24, 2009 at 5:16 pm

    Yes. We should fund the children.s higher education as much as we can afford. Some luxuries one can forego However, they should be brought up in a manner that they do not think that they are entitled to it.

    This can be used as a lesson how to plan for the future. Someday they would have kids and know that you have to start planning early.

  47. Paul S on July 26, 2009 at 11:19 am

    Great read here. Many interesting perspectives.

    My plan is to have enough RESP funds to pay for my 3 kids tuition/books etc (direct school costs). Then I’ll help with living expenses roughly equivalent to the cost of having them at home…as I want them to go away to school. For me going away to school is a fundamental part of the university experience and helps them grow up.

  48. Ed Rempel on July 26, 2009 at 10:43 pm

    Hi Kathryn,

    You are right that RESPs can cover a very broad range of costs. The child needs to be registered in a full time program of a recognized educational institution of at least 13 weeks.

    So, it covers trades, foreign universities and many other programs.


  49. Ed Rempel on July 26, 2009 at 11:15 pm

    Hi Kathryn,

    Great topic! Studies generally agree with you that the more money you give your kids, the poorer they will be later in life.

    What kids need is to learn money skills. If they are good with money, they will always be fine, whether or not they are debt free when they get out of university. Teaching them money skills is more important that paying for their education.

    Having them pay for part of their costs is one way good way that can help them learn. Including them in financial discussions is another way.

    We have seen quite a few kids with decent money skills where their parents paid for everything, but generally that is the exception.

    There is a significant issue with Baby Boomers that many are over-indulgent with their kids. They pay for everything, depriving their kids of the benefit of struggling with money. Having a part time job is usually very good for kids as well, since it teaches them a work ethic and what type of job they DON’T want.

    Education can be quite expensive though, so it can be quite difficult for kids to pay for everything.

    You can, of course, save for their education and still use paying for university as a learning experience in a number of ways, such as only paying part of the cost, not telling them that you have the money until after they have paid for it, and including them in the financial discussion.

    Generally, it is best to make sure your kids pay part of the costs and to discuss with them how much money is used. Show them the RESP to expose them to investments and include them in your plan of how much to withdraw each year.


  50. Stephen R on October 26, 2009 at 3:02 am

    A little late to this party, but I’ll comment anyway. My wife and I have discussed this at length, coming up with a lot of the same points made previously. We are opening an RESP for our daughter because we want to have the choice as to whether or not we help her fund her education when she’s ready to go. We can always decide not to give her the money, but if we don’t start saving now, it’ll be tough to come up with $100000 on the spot if circumstances dictate that we should. We don’t want the decision to be made by default.

  51. cannon_fodder on October 26, 2009 at 12:32 pm

    Stephen R,

    And, if your child(ren) don’t require the money for furthering their education, you can take back all of your contributions tax free and transfer your earnings to your RRSP. I’m guessing that you end up losing out, though – if you kept the earnings you would have to pay tax plus a 20% penalty. If you contribute the earnings to an RRSP you probably don’t get a tax refund on the transfer since it won’t be counted as a contribution although it will count against your contribution limits.

  52. Stephen R on October 26, 2009 at 12:41 pm

    The 20% penalty is to account for the 20% contribution the government makes, so the only real downside is the fact that any earnings will be taxed as regular income if I can’t contribute them to an RSP. The money still grows tax-free, though, so it’s not so bad at all.

    That’s assuming I keep my maximum contribution to $2500/year to get the maximum matching contribution of $500/year.

  53. FrugalGreenie on January 2, 2010 at 1:30 pm

    Free money from the government…hmmm sounds like a good idea to me. I don’t see this happening in a lot of other investment vehicles. Leaving options open for my child also seems like a good idea. My goal is to leave options open for the child he or she doesn’t need to necessary know how much money is available for their schooling. I myself self funded my entire university on scholarships despite my parents having set aside money for my tuition. When I didn’t need it they moved it to another investment option. (At that time RESPs didn’t exist.)

  54. Cesar_G on February 18, 2010 at 5:07 pm

    HI All,

    Anyone can help me? I have opened a TD Waterhouse self directed RESP and decide to transfer the balance from my current TD RESP to TDW.

    I was told by the TD representative that transfer can be possible but I have to pay back to Government all the grants that I have received!! (About $1,1K).

    Anyone of you have had a similar situation??

    Any suggestion?

  55. Ed Rempel on February 28, 2010 at 1:43 am

    Hi Cesar,

    Sounds wrong. You can transfer an RESP to another provider and keep the CESG.

    Are they referring to the CESG, or other grants?

    There are actually 4 different grants you can qualify for. The CESG is only one of the 4. Not all RESP providers are registered to work with all 4 grants. If you transfer to one that does not have offer a grant, then you will lose the amount you already received of that grant. All providers will work with the CESG, though.

    Your case sounds very strange, since you are only transferring it within TD. They are actually separate institutions, but you would think that both would be registered for the same grants.

    It is possible that hardly anyone does a self-directed RESP and the costs of being registered for all all the grants is too high. That is the reason given by institutions that are not registered for all 4 grant programs.


  56. Cleatus on June 28, 2011 at 12:11 pm

    In Ontario we receive a Child Care Benefit of $100 per child per month. I think it would be selfish of any parent to use this money for anything other than saving for their children’s education.

    I deposit this money (I have two children) every month into their RESP account. With the CESG and the interest there will be lots of growth over the 17 years from the time they are born until they go to college/university to help them with their secondary education costs.

    I think it is unimaginable to allow your child to leave college with considerable debt. While I agree that they should also work a part time job to understand and appreciate what hard work is all about, I think assisting them based on their accomplishments in school is definitely something each parent should do.

    I went to college, paid for everything myself, however I had a great summer job that paid me $15K a year that my father helped me get. I do not have that luxury for my children and therefore have decided to assist them with RESP’s.

    Now I am not just giving them all of the money straight up. They must earn it. And they probably are not getting all of the RESP money either. Just the CESG and interest. The rest will go into my TFSA and or RRSP depending on my situation farther down the road when in 14 years they are both in college/university and I am 47.

    To each their own, however again I feel it is almost ignorant to think that in 15 years the costs of secondary education will not be almost double or triple it was for myself and not be prepared to at least assist my children with those costs.

    The longer you wait, the harder it will be to use the time and compounding interest gains to help them.

  57. Stephen on July 11, 2011 at 3:02 pm

    You may think it’s selfish to use the Child Care Benefit for anything other than RESPs. What about those insensitive clods who are using it for child care?

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