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.

Ed

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?
Thanks.

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

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.

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.

Ed

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.

Ed

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

http://www.uoguelph.ca/registrar/studentfinance/index.cfm?app=tuition&page=index&level=ug&year=2009&semester=fall&cohort=2009&campus=uofg&feepage=canft#residencefee

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.

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.