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Education Planning for Special Needs

Published: 08/15/2009 by Investors Group Submitted by L. Hoffmann

» Education & Learning Support

You want the best for your child and that includes a post-secondary education.
Setting up a Registered Education Savings Plan (RESP) for your child is always a good savings strategy but you might not be taking full advantage of the benefits of your RESP or be accessing other savings and grant options that can significantly add to your child’s education nest egg.

The Basics of an RESP

Taxes on the earnings inside an RESP are payable in the hands of the child and are deferred until the child withdraws the money while attending a post-secondary institution. Currently, a lifetime maximum of $50,000 can be contributed per child. An RESP also offers the added incentive of ‘free’ government money in the form of the Canada Education Savings Grant (CESG) program that provides a minimum 20 per cent top-up grant to the first $2,500 contributed each year, which could add as much as $7,200 in extra capital over time. Additional grants may also be available to RESP holders through the Canada Learning Bond (CLB) and various provincial programs¹.

The Added Value of an RESP for a Disabled Child
An RESP for a disabled beneficiary who is eligible for the disability tax credit must be collapsed at the end of the 35th year after it was started.

This means that you have five extra years to continue contributing to your child’s RESP and enjoy the considerable added value that comes from the magic of compounding inside a tax-deferred plan. A disabled student can also claim the non-refundable education income tax credit at the full-time rate of $400 per month of studies, even if the student does not meet the full-time attendance requirement.

Government Sources of Educational Funding
When a disabled child is ready for college or university, they may qualify for the Canada Study and/or Access Grants funded by the Government of Canada. They may also be eligible for assistance from provincial bursary programs.

The Canada Study Grant for the Accommodation of Students with Permanent Disabilities can provide up to $8,000 per loan year to help pay for exceptional education-related costs associated with a disability. These costs may include tutors, oral or sign interpreters, attendant care for studies, specialized transportation (to and from school only), learning disability assessments note takers, readers and braillers.

The Canada Access Grant for Students with Permanent Disabilities is awarded to full–time and part-time students with permanent disabilities who have demonstrated financial need. It is intended to assist in covering the costs of accommodation, tuition, books, and other education-related expenses up to $2,000 per loan year. 

Scholarships, Awards and Bursaries
To further complement education savings, investigate  the many scholarships, awards and bursaries available through non-governmental associations and the schools themselves:

  • Associations such as the Learning Disabilities Association of Canada and the Association of Universities and Colleges of Canada offer various awards.
  • Contact the Awards office at your college or university of choice.
  • A Financial Aid Directory is available through the National Educational Association of Disabled Students (NEADS) www.neads.ca.

It’s important to put educational and financial plans in place as early as possible. A well-designed program that will consider the many available options can help students to reach their full potential. v

1.Canada Education Savings Grant and Canada Learning Bond are sponsored by Human Resources and Skills Development Canada.
This report specifically written and published by Investors Group is presented as a general source of information only, and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide legal advice.
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