Perhaps you just received notice of acceptance into the university you want to attend. Now, you have to find a way to pay for it. It is never too late to start budgeting your money for college. You also might want to ask your parents how to access available education savings funds.
A common savings plan parents set up for children to use after high school is the Registered Education Savings Plan. An Heritage Education Funds usually begins when your parents commit to a certain contribution amount on a set schedule. This money stays in an account set up for you until you need it for school.
Barring any restrictions, you can spend your RESP money on more than just tuition and books. For instance, you can use it for room and board, and some students apply it to supplies for class and studying. Laptops, tablets, a desk, and other devices or furniture are examples of items students purchase with RESP funds. Additionally, you can use RESP money for meal plans, which account for about 46 percent of your total college cost.
You usually can spend your RESP money without much question about how you use these funds. The primary rule to follow, however, is to make sure you can prove that your purchases are education-related. It also would not hurt you to keep your receipt just in case you need them come time to answer any questions concerning how you use your RESP money if any suspicion of misuse would arise, but this is rarely necessary.
Transportation and athletic expenses are also covered by Registered Education Savings Plan (RESP) money. All the government usually asks in return is that you prove you are enrolled in a qualifying educational program. In fact, you do not necessarily need to attend a school in your immediate geographical location.
Some students who received RESP money in the past studied abroad at an English university, and others attended school in the United States or other countries. RESP funds even covered entry into distance education programs. The minimum enrollment duration is usually only a few weeks at an accredited school.
Just beware of the tax regulations on some RESP withdrawals.
Educational Assistance Payments typically go right to the student who is the beneficiary. Students will have to pay taxes on this money, and this includes taxable income earned on the money invested as well as on any Canadian bonds or grants issued. However, students usually will not be taxed until personal and educational credits have been applied.
Unlike EAPs, a second type of RESP payment is not taxable. These non-taxable education savings funds, also known as capital contributions, are considered refunds of an RESP contribution made rather than being treated as income.