Government Grant Funding Can Help Defray Your Education Cost-ChrisJohnson-GrantFundingExpert

Are you buying books, school supplies and clothing as you get ready to go back to school? Full-time post-secondary students in Canada can expect to pay about $15,000 on average to cover a year of expenses.

Fortunately, the government offers to assist with your post-secondary education costs. The federal government provides various income tax credits, loans and grants; and exempts scholarships from taxation. Provinces and territories also offer loans, tax credits, and tuition reimbursements.

Suppose, for example, you are a Saskatchewan resident paying $7,000 tuition and you are enrolled full-time for eight months in 2013. Early in 2014 you should download form T2202A (Tuition, Education, and Textbook Amounts Certificate) as a PDF file from your educational institution’s website.

Your tuition credits, in this example, are worth up to $1,820, which is 26 per cent of the $7,000. In addition, you would have education credits worth $832 and a textbook credit worth $24, using the Canada Revenue Agency (CRA) formula based on the number of months of enrolment shown on tuition form T2202A.

As a student, you must complete federal schedule 11 and Saskatchewan schedule SK (S11) of your tax return each year to claim these credits. Any tax payable on summer wages and RESP withdrawals can be offset by these tax credits.

If your income is too low to use all of your credits yourself, you can transfer up to $5,000 of unused credits to a parent, for a saving of up to $1,300 tax.

Even after transferring tuition credits to a parent each year, you may still be carrying forward thousands of dollars’ worth of tuition credits, to be claimed when your own income is high enough to be taxable.

Scholarships and bursaries are fully exempt from tax when they are connected with a program for which you can claim an education tax credit. Here are some quick tips for scholarship funding.  Start researching scholarships a year ahead of time. The more scholarships you can apply for, the more likely you will be awarded at least one. Do not ignore small scholarships. Every scholarship dollar you receive is a dollar you did not have and one less dollar that you will need to borrow. And, of course, if you a student of Chris Johnson, The Grant Funding Expert, you may qualify for expert advice through email consulting.

Registered Education Savings Plans are another good resource, especially since the federal government helps parents and grandparents who use Registered Education Savings Plans to save for education costs.

For every dollar you deposit to your RESP, the government adds a 20 per cent Canada Education Savings Grant (CESG) of up to $500 annually. The government’s matching grant is equivalent to earning a guaranteed 20 per cent rate of return on your RESP deposit. There is also a $500 Canada Learning Bond available to help low-income families get an RESP started.

Some provinces and territories also provide incentives for their newly-minted graduates to use their knowledge within their home province. For instance, Saskatchewan encourages university and trade school graduates to work in Saskatchewan. The Graduate Retention Program (GRP) reimburses up to $20,000 of the tuition paid, spread over seven years. The GRP credits are paid at the rate of 10 per cent per year for the first four years, subsequently rising to 20 per cent per year for the fifth, sixth and seventh years that the graduate stays in Saskatchewan. (The GRP reimbursement offer is also available to graduates of a post-secondary institution outside Saskatchewan who have moved to Saskatchewan to work.)

Wherever you live in Canada, there is likely a similar program to help you save for, pay for, and benefit from your post-secondary education, thanks to a variety of government grants.



(Adapted from an article written by Terry McBride for The StarPhoenix.)