Low-income families missing out on RESP benefits

A new website launched Friday with the goal ofimproving low-income families'awareness ofthe benefits of RESPs and the freefederal grants available to help them save for theirchildren's education.

The website www.smartsaver.org is the work of the Omega Foundation, a group thathelpsthe less-well-offcope with a financial system that's usually caters to those with money.

The website is part of a wider community outreach initiative designed to boost financial literacy about education savings.

The Omega Foundationsays it carried out research that foundhuge numbers of low-income Canadians were unaware of registered education savings plansand the grants that Ottawa provides to helpRESPs grow faster.

"The government of Canada's RESP and Canada Learning Bond programs help families to save for their children's education, but many low-income families don't know about and don't benefit from these useful financial tools," said Omega chairman Martin Connell.

Bonds left unclaimed

The Canada Learning Bond (CLB) is available only for lower-income families (those with net incomes below $40,900). It provides an initial tax-free grant of $500 for the RESP of every child born in 2004 or later whose family qualifies for the National ChildBenefit Supplement and $100 for every following year, up to a total of $2,000.

Families don'tneed to put any money into the RESP to receive that bond money; they just need to set up an RESP and apply for the money.

The Omega Foundation estimates that the families of 81 per cent of eligible children almost 900,000 in all had not applied for the grant money they were entitled to.

The foundation hopes to raiseawareness of the bond specifically and of the benefits of RESPs generally,because they both encourage post-secondary attendance forchildren who might not otherwise go.

"Saving for a child's education not only helps to ensure that they'll have the funds to pursue their goals; it also encourages them from a younger age to view higher education as an achievable part of their future," Connell says.

Studies have shown that kids with even small education savings nest eggsare much more likely to go on to pursue post-secondary education.