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Fact-checking Harper's 'savings' plan for post-secondary education

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The claim: The Conservatives will help low- and middle-income families save for their children's post-secondary education by doubling the amount that they can receive from the federal government through RESPs.

Registered Education Savings Plans (RESPs) are saving schemes that encourage young families to start saving for their children's education from birth. Money set aside through RESPs is eligible for a grant.

The Conservative government has promised that middle-income families will get an additional 10 cents per dollar for the first $500 contributed to an RESP (so, 20 cents total) while low-income families will get an additional 20 cents per dollar saved (so, 40 cents total), up to $500.

Families must put aside $2,500 per year to get the full amount of money promised in the Canada Education Savings Grants, and $500 minimum to get the additional money promised through the additional grant enhancements, announced by Harper.

Following along? This means that if you're a young family, you need to save $2,500 per year, per child to achieve the full grant. This is on top of also paying for child care, food and transit, and potentially, a mortgage and your own student debts.

If your child decides that they'd rather not go to school, you lose the grant money and pay a penalty, though you get the principle back. You also get interest earned if the RESP is more than 10 years old and your kid is older than 21. You can hold onto your RESP for 36 years.

A 2009 report found that while 33.7 per cent of RESP holders made more than $80,000, just 11.4 per cent of RESPs holders made less than $20,000. Rather than equalizing the playing field, RESPs further entrench social inequality.

Funding higher education through increasing contributions to private savings funds is a little like calling a TSFA an anti-poverty program. It's overly complicated (both for average people to understand but also as a program to administer) and it assumes that the cost of university or college should be born by the parents rather than the students themselves, despite the fact that fewer than half of students receive family help.

Tuition fees are record high and, as pressure has mounted on families to cover the costs, even some parents are taking on loans to fund their kids' fees.

Contributing to RESPs also means that families are encouraged to spend less. With a contracting economy, encouraging families to save will disincentive spending, necessary to help boost the economy.

RESPs are a classic Band-Aid solution. While this $45-million promise will give a few hundred dollars more to a few thousand students, it pales in comparison to how much students actually owe in student debt.

This past spring, Harper's Conservatives increased the borrowing ceiling from $19 billion to $24 billion. If that trend continues, no amount of minor tweaks to the RESP system will address the looming student debt crisis. 


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