Federal Budget 2017 Announces Major Initiative to Increase Family Uptake of the Canada Learning Bond
New study shows education savings like the Canada Learning Bond boost completion of post-secondary education
(TORONTO – March 24, 2017) The new Federal budget announces $12.5 million to help more low-income families start saving for their children’s education.
The funds will be used over the next five years to improve awareness of and access to the Canada Learning Bond (CLB), a government grant that provides low-income families with funds to start a Registered Education Savings Plan (RESP) for their children. Through the CLB, the government provides the first contribution of $500 and up to $2,000 in total. Any child born since 2004 whose family income is in the lowest tax bracket is eligible.
Although the CLB has existed since 2004, awareness and uptake of the program remain low. To date only one-third of children who qualify have received their grants. More than 1.7 million eligible Canadian children have not.
The government announced that it will work with community organizations and businesses to explore new ways to increase awareness of the CLB and reduce barriers to accessing it.
Recent research from the Omega Foundation demonstrates a clear link between children who have savings for higher education and successful completion of post-secondary education.
An RESP, the research finds, can set in motion a chain reaction of benefits beyond the financial. The simple act of opening an RESP can motivate a family to save, and a family’s growing investment can make children more confident and committed to pursuing post-secondary education.
“The link between family savings for post-secondary education (PSE) and PSE access and completion is clear, as is the link between savings and attitudes such as expectations for a child’s educational success,” writes Dr. Andrew Parkin, author of the Omega-supported study, “Family Savings for Post-Secondary Education.”
Canadians’ future prosperity depends on the skills and productivity of the country’s workforce. However, many young people face barriers to pursuing the higher education they need to succeed. By improving access to the CLB, the Federal government’s investment will ensure that children from low-income families experience the benefits of education savings, even if their families can’t contribute.
“Families are clear on the importance of higher education to their children’s futures, but often feel unable to provide for the opportunity,” notes May Wong, Executive Director of the Omega Foundation. “This is especially true for families with low incomes who may be struggling to make ends meet. The Federal government’s investment will help more families realize the power that all families possess to influence their children’s educational progress and outcomes, by starting a savings account for their education.”
———————————————————————————
Background: (From Budget 2017)
“Improving Access to the Canada Learning Bond
When families are able to get an early start in saving for post-secondary education, the benefits are two-fold: it makes post-secondary education more affordable and reduces student debt loads upon graduation.
Currently, the Government encourages families to save for their children’s postsecondary education through tax-assisted Registered Education Savings Plans, and provides additional support to help low-income families get a head start on their savings through the Canada Learning Bond.
Unfortunately, some low-income families face barriers in accessing these opportunities to save. In 2015, only one-third of eligible children received the Canada Learning Bond.
To help more low-income families benefit from the Canada Learning Bond, Budget 2017 proposes to reallocate $12.5 million over six years, starting in 2017–18, from Employment and Social Development Canada’s existing resources to launch a pilot project. Working with community organizations and businesses, the pilot project will explore new ways to increase awareness of the program and reduce barriers to access.”
About the Omega Foundation:
The Omega Foundation is a Canadian registered charity dedicated to enhancing the financial literacy and capacity of low-income Canadians. The Foundation’s SmartSAVER program works with public, private and community partners to help low-income families access Registered Education Savings Plans (RESPs) and the Canada Learning Bond (CLB). SmartSAVER works in partnership with BMO, CIBC, Meridian, RBC, Scotiabank, TD and Vancity and is supported by the Haynes Connell Foundation, the Lucie and André Chagnon Foundation, the J.W. McConnell Family Foundation and the George Cedric Metcalf Charitable Foundation.
For further information: May Wong, mwong@theomegafoundation.ca, (416) 966-1418.