Harper promises $100-$200 tuition help to families

Announcement looks to be a bid to broaden the Conservatives’ approach to taxes and investment, which has been criticized for favouring the rich.

Thestar.com
Sept. 8, 2015
By Tonda MacCharles

In a second day of tying economic announcements to programs aimed at disadvantaged families, Conservative Leader Stephen Harper said he would double the federal grants to low- and middle-income families trying to save for their children’s post-secondary schooling costs.

Harper said the measure would see Ottawa kick in $100 to $200 a year into the registered education savings plans (RESPs) of struggling families who sock away money for tuition. The Conservatives say it would cost the federal treasury $45 million a year.

On the heels of Monday’s announcement to increase the amount of money Ottawa gives families who invest in registered disability savings plans, Tuesday’s announcement attempts to recalibrate the image of the Conservative party’s approach to taxes and investment, spreading financial support beyond niche voting segments to broader groups.

The education savings plans are hugely popular.

The Conservative party says that by December 2014, parents had sheltered more than $44 billion in RESPs for their children’s post-secondary education.

Every family who puts away money in an RESP for their children’s future tuition already receives a basic grant from Ottawa of 20 cents on every dollar for the first $2,500 contributed annually - about $500.

Low- and middle-income families already get extra support, with Ottawa kicking in $50 to $100 on top of the basic grant, depending on the net family income threshold.

Harper says he’ll boost that help.

Low-income families, who in 2014 were those whose net income was $43,953 or less, would benefit from the richer plan that would double the amount Ottawa provides from 20 cents to 40 cents per dollar on the first $500 contributed to an RESP each year. That means the current enhanced grant would rise from $100 to $200.

Middle-income families, defined in 2014 as those whose net income was between $43,953 and $87,907, would get bumped up too. Now eligible to receive 10 cents on every dollar received for the first $500 contributed to an RESP, they would see the federal enhanced grant go up to 20 cents on the first $500. In other words, they’d go from receiving an extra $50 to an extra $100 from Ottawa.

A background document on the announcement estimated an extra $100 would go a long way, based on a generous estimate of interest rates.

It said it would allow families to shelter money that - at an estimated return rate of 5 per cent a year - would compound annually, with the extra $100 amounting over 15 years to $2,200 in the pockets of future students. The Conservatives say it could help cover more than one-third of a year’s tuition costs, citing Statistics Canada data on average 2014-15 tuition costs or $6,210.