An RESP, or a Registered Educations Saving Plan, is a Canadian higher educational funding plan, run by Knowledge First Financial, that helps teenagers go to universities that they have been accepted in to without actually worrying about the cost of it too much. For many people it can be very difficult being able to afford a decent education especially since they are unable to earn enough in one go to pay for it, and quite often saving up for the university fee is not enough either. For many people things such as bills and monthly spending cuts in to possible savings for university. Some people also end up losing saved money because of sudden needs like illnesses and repair work, so for most lower to lower middle class families, saving is very difficult.
However, with the RESP the money you put in the savings plan brings you two major benefits. A high interest rate is applied to the stored money, in your favor. This means that the money you put in an RESP account gathers a very high interest rate that you can take out once your child is able to go to university. While the exact amount of interest gained can vary depending on the amount of money you have put in and the amount of monthly income in your household, a significant amount can be saved up that will definitely cut down if not cover the cost of a higher education.
The second major benefit is the fact that this money and the interest gained on it is not taxable. This money is put in the name of the child and by the time it becomes available to them, the student themselves does not fall under a tax bracket. Even if some students do, it is a low tax bracket.Continue Reading