RESP Sometimes Doesn’t Make Sense

RESPs are a great savings tool for parents (or Grandparents) who want to help young folk with the always rising costs of a post-secondary education. With the government add-ons, the whole system really does make sense, if you are planning on helping your children out, but I started wondering would there be a time when putting money into an RESP would make no sense?

There are some very obvious scenarios when savings doesn’t work, like if you are carrying credit card debt, and are having problems “making ends meet”, then putting money in an RESP might not make a lot of sense. Pay off your debt, then get onto the savings bandwagon, with the RESP.

Another interesting scenario I ran into was, what if you have not paid off your own student loans (in Ontario OSAP), by the time your kids are born, should you put money into an RESP, while you are still paying off your own student loans? As with all of these questions, the answer seems to be: it depends.

If you have enormous student loans and cannot keep up enough to make the payment plan set up for you, then maybe an RESP is not a great idea. You should also contact the Student Loans folks and point out that you are having problems paying your loan off.

Typically Student Loans (from the Government) have a relatively low(er) interest rate, and given the automatic 20% kick on for an RESP deposit (up to $2500) you need to do the math on whether you want to pay into the RESP or pay down your loan faster. As I do not believe in the concept of Good Debt, I would suggest paying off the Student Loan First and then try to catch up with the RESP (yes, I know the interest on Student Loans is favorable to your taxes, but it is still money spent on money already spent).


A Building Block to Savings ?

If you have a Student Line of Credit with a bank (that you opened while at school) and that needs to be paid down, I would strongly suggest that you should pay that down before putting money into an RESP for your child. The Banks rates are usually variable in these situations, so a sudden up tick in interest rates could spell disaster in terms of this debt-load.

The idea of paying off student loans, while putting money into an RESP seems like a contrary idea to me, but I am curious to hear what my readers might be thinking in this area?


Textbooks are too Expensive

The business of post secondary education, and training programs has taken off in terms of profit margins in specific areas.

When I was a student (many years ago), the profit centers for Universities were:

  • Tuition Fees
  • Government Funding
  • Private Funding
  • Gifts from alumni
  • Services on campus
University Costs for RESP

Those Two Books Cost Almost as Much as 1 Term Tuition when I was at School.

There was also another income center which was shared between the professors and the school and that was the sale of Text Books. When I started at U of Waterloo there were not that many texts on computers, and the ones we used were quite expensive, but now the entire text book market has exploded, and the prices have increased a great deal.

Why, is my question, are text books still so darn expensive? The simple answer is, profits, and a captive audience. If a professor makes the textbook compulsory for a course, he is forcing students to either:

  • Buy the textbook new
  • Buy it from a Used Book Store (which many times, is a previous version and may not be up to date, or worse a different text is to be used (which happens a lot in technology courses)).
  • Rent the book ? Yes there are such services out there as well.
  • Find a “boot leg” PDF, or similar “unofficial” version

These textbook costs are on top of the new Large Service fees from Universities, and also the costs of living away from home (if that is the case). Hope you folks are saving, if you plan on helping your kids out with post-secondary education costs.

How expensive can these books be? In the photo in this post, those two books added up to $350.00.



RESP Proof of Enrolment

I have written before about Money to Get Money, complaining about how extricating your money from your child’s RESP is an overly complex process, but let me step back and explain the importance of the Proof of Enrolment that most financial institutions need to allow you to withdraw money from the RESP account. Different schools have different ways of giving you a proof of enrolment , some charge you for it (about $10) some give you a PDF for free (Acadia U did that).


How Much Will You Need for her to get to school
Image courtesy of jk1991 at

The problem you have is that most schools will not give you the Proof of Enrolment, until you pay the fees, so you can’t have money from your RESP, until you have already paid for your fees. This means, you most likely, will need a line of credit (or a savings account) with the amount of your fees available to you (seems a little backwards, needing enough money to pay for your fees, so that you can get out enough money from a savings program to pay your fees).

You can also use the Proof of Enrolment in other ways: you can use it for Positive Enrolment for your insurance provider (Manulife likes it). Most insurance providers want you to do a Positive Enrolment action by either going on line, or supplying proof that your child over the age of 18, is at school (and can remain covered by your insurance policy).

Another important aspect of your RESP journey.



The Business of University Fees

For those of us who have kids about to return to University we are about to see the onslaught of fees that are charged by all Universities (in Canada). There are many fees being charged, but the two that caught my eye (on my daughter’s tuition bill from Queen’s University) were:

Grad Health Insurance 2016 Fall 2016/09/30 $280.00
Grad Dental Insurance 2016 Fall 2016/09/30 $220.00

For those who do not want to do the arithmetic, that is $500 for 4 months.

The Noble and Under-appreciated Stubby

Don’t see any beer taxes on the tuition bill (luckily)

Remember that if your child is in school your health insurance plan covers both Health & Dental (if you are covered that is), so you really don’t need to pay this fee, and most universities will allow your child to opt out of the charges (which seem quite high to me). I have checked with our friends at LSM Insurance who think the fees are a little high, but not too bad. Another factor to take into consideration is that a lot of Health Plans have positive enrollment clauses (I am with SUN Life for health insurance and that is the case), where you must every year (after a child turns 19 I think) go to the Insurers web site (or send in a form) stating that your child is still at school, or the child loses their coverage under the plan.

How easy is it to opt-out of the health and dental fees at University ? At most schools, not as simple as you might think, and deciphering which fees are optional, and which are mandatory is a real quagmire of data.

I remember folks opting out of fees when I was at University, but typically those were the folks that were paying their own way, and didn’t want to pay for things they weren’t going to use.

What are some other fees from Queens University ? These add up to almost 25% of the tuition bill we are paying (note that residence or living expenses are not here either). Still think you won’t need an RESP to help your kids go to University? I’d also like to remind those with younger kids that there is no legislation limiting the fee levels (tuition yes) or how much they can increase.

Charge Amount
Student Assistance Levy $40.15
Education Society Fee $10.00
Athletics $168.41
Student Wellness Services $58.93
Campus Observation $0.50
Work Bursary Program $5.38
Student Life Centre $21.50
SGPS Society Fee $45.72
Telephone Aid LIne Kingston $0.75
Legal Aid $5.00
Sexual Assault Crisis Centre $1.25
Canadian Federation of Student $16.24
SGPS Student Advisors $3.81
SGPS Accessibility $3.00
The Queen’s Journal $3.50
CFRC $7.50
Walkhome $19.86
Oxfam $0.87
Bus-It $66.25
Qns Internl Affairs Associatio $1.00
SGPS Sports Fund $2.00
Queen’s Food Centre $1.25
HIV Aids Regional Srvcs. $1.00
Union Gallery $3.00
Queen’s Daycare $1.00
Four Directions Aborig Stdnt C $1.00
Dawn House Women’s Shltr $1.07
Q Intern Stdnt Soc Bursary Pgm $0.71
Student Refugee Support $3.37
Reelout Art Project $1.80
Positive Space Program $0.34
Kingston Youth Shelter Project $1.00
Yellow Bike Action Group $0.60
Ban Righ Foundation $3.00
The Grad Club $20.00
Centre for Teaching & Learning $1.35
Sexual Health Resource Centre $0.92
SGPS Sustainability $1.50
Levana Gender Advocacy Centre $0.81
Kgston Loving Spoonful Charity $2.00
Grad Health Insurance $280.00
Grad Dental Insurance $220.00


My Four Best Investments

Over my financial career I have made many mistakes investing, however there are a few very good investments that I can point to as successes.

My first investment (but not my best) is buying into the Federal Public Service Pension Plan. Thanks to blind luck, I was able to do this, and while it is my biggest investment (yes, even more than my house), it is not the investment that I am most proud. As I outlined in a previous post, thanks to some excellent timing (read luck) on my part I was able to transfer my Nortel Pension into the Federal Public Service Pension plan, and that will (hopefully) allow me to actually retire.

Trent University

Trent University

My 3 other investments (of which I am equally proud) are:

  • A Bachelor of Arts Degree from Wilfrid Laurier University
  • A Bachelor of Kinesiology Degree from Acadia University
  • An Honours Bachelor of Science Degree from Trent University (and hopefully a teaching diploma from Queens University)

As you can tell from the list these are the three degrees that, thanks to some help from my RESPs ,that I helped my daughters’ receive. My youngest daughter has just graduated from Trent University, and as I mentioned in the post I did for me eldest daughter’s degree So That is What $50,000 looks like, it was another excellent investment. Whether my son goes to post-secondary education, we shall see (we are hopeful), but so far aside from being able to retire, I feel I have gone 3 for 3 on these investments.

This is not to say, that if you have decided not to help your children with their post-secondary education you are a bad parent (far from it, many folks just cannot afford to help their kids), just that I have made some awful investments in my time, luckily I have made a few good ones as well.


%d bloggers like this: