Knowledge is Power – Here Are Ways to Afford It

Knowledge is power, but education is expensive. What are the funding options? Join us in this first of a series to sort it all out.  Bottom line:  it depends on who you are and where you live.  Our veterans, for example, have just had the lovely news that up to four years of free education at a post-secondary school may be possible.

Meanwhile, one in eight family units in Canada has a student loan and student debt is up 44% since 1999¹.   So tax and financial advice is critical.

According to Statistics Canada Education indicators – most recently released in 2015 – 54% of Canadian adults age 25-64 have post-secondary education; the highest rate within the member countries of the Organization for Economic Co-operations and Development (OECD).  That investment has paid off with employment rates rising in this cohort to over 80%.²

At the same time, we are faced with the challenge of above-average costs associated with attaining that education: “The total expenditure per student on university education (Bachelor’s, Master’s, and Doctoral levels or equivalent, including research and development) in Canada was $ 25,503 (US dollars). This was the second highest among the OECD countries…”

For these reasons, of particular interest to adult learners in Canada, there are some basic, tax-assisted funding options available; now is a great time for tax and financial advisors to contact families with university-bound adults to discuss funding options.

Grants and Tax Free Education

Veterans: Current programs provide monthly financial support plus assistance with expenses for students in a full-time education program if:

• They are the child of a deceased Canadian Armed Forces member who
  • Died as a result of their military service, or
  • Was in receipt of a disability benefit of at least 48% at the time of their death.
• They enroll in a full-time educational program before they turn 25.

These benefits are available until the student reaches 30 years old.

In addition, as noted above, the government has recently announced that it will fully fund a post-secondary education to eligible veterans who want it.  Details of this new program are yet to be announced.

Canada Job Grant:  This is a collaborative program between the federal and provincial government designed to assist employers and employees in developing skills for success.  If you are an employer, this is potentially a good option to consider for staff training.  The program is available in all provinces except Quebec.  It provides grants of up to $10,000 annually to cover two-thirds of the costs of training.  Any grants received must be included in income by the employer receiving the grant.  However, this income will be offset by the deduction for the expense of the training.

Student Grants:  The federal government provides Canada Student Grants to applicants who are in financial need, are disabled, or are supporting children while attending school. Provinical/territorial scholarships and bursaries are also available in most provinces/territories.

Student Loans: The federal government provides the Canada Student Loans Program.  Financial assistance is available for up to 340 weeks (400 if enrolled in doctoral studies).  The amount of funding available varies by province.  Student loans must be repaid starting six months after graduation or cessation of studies.  Most provinces also have student loan programs.

The fixed interest rate on student loans is prime + 5% or students may opt for a floating rate of prime +2.5%.  A tax credit may be claimed for interest paid in the current year plus any interest paid in the prior five years that has not yet been claimed.

Next time:  Tax Advantaged Student Supports

¹Survey of Financial Security, 2015, Statistics Canada. http://www.statcan.gc.ca/daily-quotidien/140225/dq140225b-eng.htm
²Statistics Canada Report, Education Indicators in Canada: An International Perspective 2015   http://www.statcan.gc.ca/pub/81-604-x/2015001/hl-fs-eng.htm

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