Description: If you are post-secondary education student benefiting from of a Registered Education Savings Plan (RESP), you may have some good news for your finances. The federal government has upped the amount full-time students can withdraw from the education assistance payments (EAP) portion for their first 13 weeks of study from $5,000 to $8,000. The EAP represents the government’s contribution to the RESP above the principal portion contributed by parents or grandparents. After those initial 13 weeks, the cap comes off; students in full-time academic study can use as much of the EAP as required. While the EAP is taxable to the student, the principal portion is not as the contribution comes out of the parents’/grandparents’ after-tax funds.
Date: November 26, 2023
Source: financialpost.com
Link: https://financialpost.com/personal-finance/how-students-more-money-post-secondary-school
Discussion points:
1) How many of your classmates are the beneficiary of a RESP? Were you aware of this positive news regarding the EAP?
2) The article noted roughly 50% of families with children under 18 have signed up for RESPs. If you were advising a government minister who wanted to expand the uptake of these plans, what would you recommend?
3) Chapter 4 of Wiley’s Financial Accounting: Tools for Business Decision-Making opens with a vignette about how Western University in London, Ontario deals with the closing of its books at its April 30 year end. How does Western deal at year end with fees paid for the upcoming intersession?
Graeme Maither, Avery Marr, Breanne Wesselius, Jagger Vandewiel
1) In our group, the four of us are all the beneficiaries of an RESP. Half of us were aware of the news of the EAP’s.
2) We believe that it should be a case-by-case situation. For example, students with scholarship’s should be able to take out less money within the first 13 weeks. However, for aviation students like we have here at Mount Allison, tuition costs are triple what a regular student pays and therefor they should be able to take out more than the $8000 cap within the first 13 weeks.
3) “Western University collect intersession course fees in one fiscal year but delivers the courses in the next fiscal year.” “This cohesion helps the university to satisfy the criteria needed to recognize revenues and expenses at the appropriate time when services are performed and expenses are incurred.”