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SubscriptionsGo to the Subscriptions Centre to manage your:My ProfileA new federal study confirms what critics have said for years: Ottawa’s centrepiece education savings program is helping higher income families much more than needy families.An internal evaluation of the Canada Education Savings Program, which pours more than $800 million in grants each year into the education savings accounts of Canadian families, concludes that it is skewed toward the well off.The report found that about half of the money goes to families with household incomes of more than $90,000, and about a third goes to those with annual incomes of more than $125,000.The grants are used to top up registered education saving plans or RESPs, a federal tax shelter, providing up to $500 a year in “free money,” as one investment firm calls it. The cash amounts to an instant investment return of 20 per cent, in addition to the tax free earnings of investments inside an RESP.Armine Yalnizyan, a senior economist with the Canadian Centre for Policy Alternatives, says young families often have little left over to save for education once rent, groceries and child care are paid each month, and therefore aren’t able to obtain government education grants through RESPs. (CBC)But as savings plans, RESPs are primarily attractive to higher income families who have money left over from basic living expenses, while less well off families living from paycheque to paycheque have little ability to save and therefore fewer opportunities to obtain the grants.The Oct.
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