Investing in your children’s future
Many low-income Canadian families think it’s impossible to save for their children’s education. Brittany Fowler does it — for three.
She was a single mom with two boys under the age of two.
And after four years of university and one year of college, 27-year-old Brittany Fowler was a few months into a new job she started when her youngest was four months old.
She scrimped and saved. She used cloth diapers for her babies. She breastfed both, then made and froze her own baby food. And along the way price-matched like a pro at the grocery store. River is now four, and Ryerson, 3.
And somewhere in the flurry of financial strategizing, sleepless nights and long days at the office she had the insight to think ahead some two decades.
She imagined her babies going to university.
A melt-your-heart mother moment which immediately triggered a panicked realization: she imagined herself paying thousands of dollars tuition, books and rent.
“It’s intimidating and scary,” she says.
While annual tuition costs vary, Ontario universities can be more than $6,000 and colleges around $2,400 for a diploma program.
Her parents never saved for her post-secondary education. She fund- ed her studies with a piecemeal of government loans and grants, and at the end she faced a $45,000 bill.
“It’s scary,” she says. “You’re in school and there’s no way you can make that money, and then there no guarantee of a job.”
It was only fate that saved her when she used an inheritance to pay off her debt.
“I don’t want this to happen to my kids,” she says. “That’s why I had a plan.”
The plan was to start saving for post-secondary education before they hit kindergarten.
A daunting task, since her annual income hovered below $40,000, with two kids to support.
Fact is, for many low-income Canadian families saving for their children’s education feels like an impossibility, says Sarah Rea, director of social commitment for Meridian Credit Union.
A study commissioned by the Omega Foundation, an organization that supports initiatives that promote financial self-sufficiency, found that among parents with an annual income over $120,000, nearly 70 per cent had opened an RESP – Registered Education Savings Plan. That figure drops to just over 30 per cent for families who make less than $32,000.
An RESP is simply an account where families save money for their children’s education after high school.
And, as Brittany discovered, she did not have to save it all herself.
The federal government offers two programs in which it puts money directly into a family’s RESP.
The Canadian Education Savings Grant: The amount given by the government depends on a family’s income and the amount that family contributes on its own. The government will add 20 per cent (up to $500) of a family’s contribution and more for lower income families. The lifetime maximum per child is $7,200.
Canada Learning Bond. This one is for low-income families. The federal government will put $500 into an RESP, and then $100 a year until age 15. A family could receive up to
$2,000. Families do not need to contribute.
And yes, all this might sound a bit confusing.
Fact is, there are some 1.9 million Canadian youth who are eligible for a Canada Learning Bond, who have not applied, said Rea.
So, to help make the process less intimidating and more accessible, a community non-profit website called SmartSAVER.org was started to unite families with government money.
And that’s how Brittany got started.
She filled out the online forms, picked a financial institution and received a call to come in for an appointment. She approached what otherwise seemed like an insurmountable endeavour with this thought: “Every little bit I could put aside could help.”
Brittany decided she could spare some government money — $50 per child, from the “baby bonus” Canada Child Benefit money she received every month from the government of Canada.
The CCB is a tax-free monthly payment made to eligible families to help them with the cost of raising children under 18 years.
She set it up so that the money automatically transferred from her account the day it was received, and put into the RESP. “I didn’t have to think about it,” she says.
“It was exciting,” she says. “I was getting back on my feet.”
When Brittany’s life changed – she met and married Joseph, her family income increased and she became ineligible for the Canada Learning Bond.
Brittany is on maternity leave, her third child, baby Rhett, was born in November. When she returns to work, the plan is to increase RESP contributions to $150 a month.
And once her children are on the precipice of post-secondary, there could be more money within reach. In a word: scholarships.
There are many types. Most high schools offer their own scholarships. And students can search for a myriad of scholarships from universities, colleges, companies, foundations, corporations and individuals at Scholarships Canada. Many scholarships are not based on high academic marks but on other qualities such as leadership skills, life challenges and more.
In Ontario, the government offers loans and grants through OSAP – Ontario Student Assistance Program – based on a student’s education expenses, course load and financial need. Loans need to be repaid. Grants are free money. Students can choose to turn down the load and just take the grant.
The website offers a calculator to get a quick estimate, but after you submit an application you’ll find out the amount and type of financial aid you are eligible for.
In addition, both Niagara school boards have independent foundations that raise funds in order to give students from low-income families a chance at a post-secondary education.
Every year, the Niagara Foundation for Catholic Education contributes $16,000 for scholarships — $500 each to 32 students across eight high schools in the Niagara Catholic District School Board. Students have a financial need and meet other requirements, says foundation executive director, Jim Marino.
And over at the District School Board of Niagara, the arm’s-length Education Foundation of Niagara provided $82,550 for scholarships last school year to students with a financial need, said foundation executive director Laura Byers.
Students are recommended by their school’s guidance office and recipients are chosen by a DSBN committee.
While the scholarship is a fraction of the true cost to attending college or university, it’s sometimes the seed a student needs in order to believe in themselves and take a leap of faith, says Nicole Smith, event and communications officer.
“It gives you the hope of looking beyond your situation,” she says.
“It’s going to make a different between where they are and where they potentially could be. It’s a door.”