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This article was published 13/12/2014 (985 days ago), so information in it may no longer be current.
The Canada Learning Bond offers cash for low-income families to save for their children's future.
It's hard to imagine a better government program. The bond is worth up to $2,000 per child in free contributions from the government to an RESP.
Yet very few families who can take advantage of the grant, available to children born in 2004 and afterwards, actually do.
Across Canada, about 29 per cent of eligible children -- those who belong to families with household net incomes of less than $43,953 -- receive the Canada Learning Bond.
It's a troubling statistic, says Darrell Cole, CEO of Career Trek, a Winnipeg-based non-profit that helps low-income Manitoba children pursue higher education and careers.
"The reality is even though the money is there and ostensibly free, for a lot of families, if you're being realistic about it, they're never going to apply for this," he says. "Many of these people are worried about surviving day-to-day. Do you really think they have the time to worry about RESPs?"
Here in Manitoba, the uptake is among the lowest in Canada at about 19 per cent
That's about 35,000 children in Winnipeg alone, or $70 million in unused grant money.
Long a sore spot for local anti-poverty groups such as Career Trek and SEED Winnipeg, these organizations have spent considerable time and resources to increase enrolment.
"We have been running programs that support people to open RESPs for many years," says Jenn Bogoch, manager of asset-building programs at SEED Winnipeg, a non-profit offering wealth-building programs for low-income households.
"But what most organizations have recognized is there is a lack of information. Basically, people don't know about the Canada Learning Bond, and when they do, there are many barriers to successfully accessing this benefit."
Yet two new initiatives aim to address these problems and substantially increase the number of families opening an RESP and accessing the Canada Learning Bond.
One is a partnership between Career Trek and RESP provider the Canadian Scholarship Trust Foundation. The group RESP provider has already been supporting the organization for some time, providing $1,000 scholarships annually for children in Career Trek programs.
But now in conjunction with a grant from the Winnipeg Foundation, the company is funding a two-year pilot program so Career Trek can hire a full-time employee to help low-income children receive the Canada Learning Bond and open an RESP.
As part of the deal, the Canadian Scholarship Trust Foundation will waive its fees for children who enrol in its program.
Cole says that was an important caveat to partnering with the for-profit company. Moreover, the program's main goal is helping families get the Canada Learning Bond, not enrolling children in the Canadian Scholarship Trust's plan.
"If they want to enrol with the Canadian Scholarship Trust, our person would be trained and licensed to take them through the process to get signed up into the program," he says.
"But it's not conditional that the families sign up with them, so we can connect them with their bank, and that would be the end of what we do."
Indeed, fees associated with RESPs have been particularly problematic for low-income families, says Bogoch. Research indicates low-income families are more likely to end up in plans -- often group plans -- that charge high fees and have restrictions that can limit the long-term benefits of the Canada Learning Bond and RESPs in general.
For this reason, SEED recently partnered with Toronto-based anti-poverty group the Omega Foundation, which runs the successful Smart Saver program.
"The Smart Saver website has existed for a number of years, and it's a wonderful tool, but what this new piece does is it allows people to initiate the process of opening an RESP," Bogoch says.
In the past, the Smartsaver.org website has been a portal to easy-to-understand, unbiased information on how tax-sheltered RESPs work in conjunction with the Canada Education Savings Grant.
In addition, it's been a vital resource for navigating the bureaucratic hoops to apply for the Canada Learning Bond, which provides $500 in grant money upon enrolment in an RESP and $100 each afterwards to a maximum grant of $2,000 for low-income children.
The Omega Foundation's executive director, May Wong, says the newly updated website now offers more than just information.
Families can now use the site to apply for the Canada Learning Bond and get started opening an RESP.
"It takes about 10 minutes and allows a parent to get the ball rolling with the basic information and help them choose from partnering financial institutions."
So far, Scotiabank, BMO, the Meridian Credit Union in Ontario and Vancity Credit Union in B.C., have signed onto the project.
Ahmad Dajani, Scotiabank's vice-president of investments, GICs and sales tools, says the bank and other financial institutions have agreed to help families open no-cost, low-risk RESP accounts.
"When we look at our work with Smart Saver, there are potentially 1.4 million children in Canada who do not have their bond yet because their families don't know about it, so what a wonderful opportunity to get the message out there."
All told, that's about $2.8 billion in unused grant money available for underprivileged children.
SEED is one of the organizations in Winnipeg that will test Smart Saver's new site. Starting this Monday, the community group will help its eligible clients use the newly expanded website to apply for the bond and open an RESP. In turn, it will provide feedback to the Omega Foundation about the site's usefulness.
Besides helping raise awareness, another major goal of programs such as Smart Saver and the one now underway with Career Trek is helping families overcome the intimidation factor associated with applying for the bond and opening an RESP.
"The documents are fairly difficult for knowledgeable people to comprehend," Cole says.
So families with ongoing financial difficulties, who may also have numeracy and literacy challenges, can be reluctant to enrol.
Furthermore, to complete the applications, families must have a social insurance number for their children, and many do not. That means filling out more application forms. As well, they must have a birth certificate for the child to get a SIN, so yet another application may need to be filled out along with a fee to pay, too.
Yet the biggest barrier for many eligible families is they simply don't know the bond exists. And when they do, they don't know where to start the process. These new initiatives should address these challenges.
And while the bond itself is relatively small compared with the cost of a post-secondary education, for many eligible families and their children, it's about more than just the money.
"A lot of research suggests the presence of savings earmarked for higher education has a profound impact on children's attitude toward their studies and aspirations," Wong says. "Most importantly, kids start developing a college-bound identity."