About HRSDC | Our Offices | Programs & Services | A-Z Index October 8, 2004 FOR IMMEDIATE RELEASE OTTAWA, ONTARIO—The Honourable Joe Volpe, Minister of Human Resources and Skills Development, tabled legislation in the House of Commons today to create the Canada Education Savings Act. The savings programs contained in the Act will help low- and middle-income families to begin saving for their children’s post-secondary education. "Today's tabling of the Canada Education Savings Act will make a difference in the lives of millions of Canadian children,” stated Minister Volpe. “The Act signals the creation of the new Canada Learning Bond and substantial enhancements to the Canada Education Savings Grant (CESG) for low- and middle-income families. These measures will help families to turn their dreams for their children’s education into real savings.’’ To encourage families to set up a Registered Education Savings Plan (RESP), the Canada Learning Bond will provide $500 to children born on or after January 1, 2004 in families entitled to the National Child Benefit (NCB) supplement for the child, followed by up to 15 annual $100 entitlements for each year the family is entitled to the NCB supplement for the child. These entitlements could be worth up to $3,000 by the time the child reaches 18 years of age. The legislation will also double the CESG from 20 to 40 percent on the first $500 of RESP contributions each year for families with a net income of $35,000 or less. The Bill will also increase the CESG from 20 to 30 percent on the first $500 of RESP contributions per year for families with a qualifying net income greater than $35,000 but not exceeding $70,000. While the Canada Learning Bond will benefit children born on or after January 1, 2004, all eligible children in low- and middle-income families stand to benefit from the improved CESG match rates effective on January 1, 2005. Since its creation in 1998, the CESG has proved highly successful at encouraging parents to save for their children’s education with a total amount of savings in RESPs increasing from a little over $2 billion in 1997 to over $13 billion in 2004. For more information on the proposed changes, please visit our Web site at the Canada Education Savings Grant Backgrounder attached. - 30 - For more information: Stephen Heckbert Director of Communications, Office of the Honourable Joe Volpe, Minister of Human Resources and Skills Development (819) 994-2482 Media Relations Office Human Resources and Skills Development Canada (819) 994-5559 BACKGROUNDER In Support of a Learning Culture How the Government of Canada facilitates access to a post-secondary education The Government of Canada is committed to ensuring that all Canadians have access to the skills development and learning opportunities needed to realize their potential, and participate fully in the 21st-century economy. Fostering a culture of lifelong learning is key to fulfilling this commitment. Access to a post-secondary education (PSE) is an important component of Canada’s strategy to secure a higher standard of living and better quality of life for Canadians. The Government of Canada offers a wide spectrum of programs and services that work together to help ensure that Canadians of all ages can achieve their learning goals. The Government of Canada recognizes that the learning process starts with the birth of a child and continues into adulthood. The 2004 Speech from the Throne reflected this by proposing the introduction of the new Canada Learning Bond, which will provide low-income families with up to $2,000 for children born after January 1, 2004. The Bond builds on the success already achieved by the Canada Education Savings Grant (CESG), which has helped many parents to save for their children’s education through grants and tax sheltering of earnings. Since its inception, $2 billion in CESG grants has been paid to 2 million Canadian children of all ages. The total asset value of Registered Education Savings Plan (RESP) savings by Canadians for their children’s education is $13 billion—up from a little over $2 billion in 1997. Currently, one in four Canadian children, 0 to 17 years of age, benefit from the CESG. The Canada Learning Bond will play an important role in ensuring that, wherever possible, any Canadian who wishes to undertake a post-secondary education will have that opportunity. To address the needs of today’s post-secondary students, the Government of Canada jointly administers the Canada Student Loans Program (CSLP) with nine participating provinces and the Yukon Territory. The CSLP helps approximately 330,000 students annually and last year provided about $1.6 billion in loans. In addition, non-repayable assistance is provided through Canada Study Grants (CSG) awarded to approximately 55,000 students—worth close to $70 million annually. Roughly 15 per cent of all Canada Student Loan borrowers also receive a CSG. The Government of Canada introduced Canada Millennium Scholarships in 1998 to help Canadian students acquire a post-secondary education and reduce student debt loads. The Canada Millennium Scholarship Foundation is the autonomous organization responsible for managing a $2.5-billion endowment from the Government of Canada and providing scholarships to students across the country. Over 90,000 students have received Canada Millennium Scholarships, awarded through the Canada Millennium Scholarship Foundation, totalling $285 million annually. While the Government makes significant investments in post-secondary education through these programs, it is working to do more to ensure that every Canadian can fully participate in the work force and society. The 2004 Budget outlined new initiatives aimed at opening up the range of people able to acquire a post-secondary education and student financial assistance, including: introducing a new grant, worth up to $3,000, for first year students from low-income families to cover a portion of tuition; introducing a new up-front grant of up to $2,000 a year for students with permanent disabilities; increasing weekly loan limits to $210 per week, and including computers as eligible expenses; extending loan eligibility to more middle-income families by reducing the amount parents are expected to contribute; and increasing income thresholds used to determine eligibility for Interest Relief and increasing the maximum Debt Reduction in Repayment. The Budget 2004 package of improvements is the result of a productive collaborative dialogue with our provincial and territorial partners and stakeholders. In addition, each year the Government’s Youth Employment Strategy helps approximately 50,000 students, between the ages of 15 and 30, by providing financial support to help them to return to further their studies. To ease the transition to a post-secondary education for adult learners with Registered Retirement Savings Plans (RRSP), the Lifelong Learning Plan allows them to withdraw amounts from RRSPs to finance training or education for themselves, their spouse or common-law partner. Learners may withdraw up to $10,000 a year from their RRSP to finance full-time training or education. Through the personal income tax system, the Government of Canada provides tax credits for post-secondary education tuition and educational expenses, and interest paid on student loans. Courses taken to finish high school, improve literacy skills or upgrade secondary school credentials with the goal of preparing adults for specific occupations or fields of higher learning may also qualify for tax assistance. As announced in the 2004 Speech from the Throne, the Government of Canada is committed to bringing about concrete improvements in the economic opportunities and living standards of Aboriginal Canadians. The Budget 2004 has confirmed the five-year funding ($1.6 billion) for the Aboriginal Human Resources Development Strategy, including $125 million over five years to replace funds that were scheduled to end on March 31, 2004. This funding will enable the continuation of programs and services provided to all Aboriginal people. It will also ensure training for the organizations administering the Strategy and access to quality child care for many First Nations and Inuit clients while they pursue training or employment opportunities. For information on these Government of Canada programs and services, visit www.canlearn.ca. The Canlearn Web site is a one-stop on-line interactive bilingual resource offering tools and information designed to help all Canadians in selecting, planning for and financing learning opportunities. Canada has long valued the importance of learning. We have an educated population that has helped us to support our quality of life and build a strong society and economy. We have a strong foundation on which to build. To keep Canada in the forefront during the 21st century requires us to continue investing in ourselves—in our skills and our knowledge. And, as a nation, it is the most important investment that we can make. BACKGROUNDER Canada Education Savings Act The Government of Canada is committed to ensuring that all Canadians can access the skills development and learning opportunities they need to realize their potential and contribute to the 21st-century economy. Ensuring that all Canadians wanting to undertake a post-secondary education can do so, regardless of their financial situation, is a key priority of the Government of Canada. This is why we are introducing theCanada Education Savings Act. The Act finds its origins in the March 2004 Budget, in which the Government announced its intention to set up a Canada Learning Bond and enhance the Canada Education Savings Grant. The new Canada Education Savings Act will provide an incentive for low-income families to set up a Registered Education Savings Plan in order to receive the Canada Learning Bond and to begin saving for their children’s post-secondary education. The Bond will provide $500 for children born on or after January 1, 2004 in families entitled to the National Child Benefit (NCB) supplement, followed by up to 15 annual entitlements of $100 for each year the family is entitled to the NCB supplement for that child. By the time a child reaches age 18, the Canada Learning Bond combined with interest earned could be worth $3,000. Canada Education Savings Grant match rates for low- and middle-income families will also increase under the new legislation. For families earning $35,000 or less, the Act will increase the match rates from 20 to 40 percent on the first $500 of contributions made each year. For families with a qualifying net income greater than $35,000, but not exceeding $70,000, the rate will increase from 20 to 30 percent on the first $500 of RESP contributions made each year. Eligible education savings after the first $500 would continue to receive the 20 percent grant under the current program. While the Canada Learning Bond benefits babies born on or after January 1, 2004, all eligible children in low- and modest-income families stand to benefit from the improved CESG match rates effective in 2005. The $35,000 and $70,000 thresholds are in 2004 dollars and will be indexed to inflation in accordance with indexation of the personal income tax brackets for 2005 when this program comes into effect and for subsequent years. The CESG, created in 1998, has proven highly successful in encouraging parents to save for their children’s education, by providing a 20 percent match on their contributions to Registered Education Savings Plans. Since its inception, the CESG has paid out $2 billion in grants. Over the same period, savings in RESPs have increased nearly five-fold to reach $13 billion in private savings. Currently, almost 2 million children between 0 and 17 years of age are benefiting from the program. While the CESG has proven highly successful, it has suffered from low take-up among lower income families. Recent Statistics Canada research indicates that 68 percent of parents with an income greater than $85,000 are saving for their children’s post-secondary education. However, only 26 percent of parents with an income under $25,000 are putting money aside for their children’s education, and only 8 percent of parents are saving in an RESP. It is anticipated that the Canada Learning Bond and the enhanced CESG will benefit 120,000 newborns and 4.5 million children from low- and middle-income families. Taken together, the creation of the new Canada Learning Bond and enhancements to the Canada Educations Savings Grant will improve the access and affordability of a post-secondary education for all students. This is a vital goal, given that in the future 70 percent of all new jobs in Canada will require some form of a post-secondary education and 25 percent will require a university degree. For more information on the Canada Learning Bond and the Canada Education Savings Grant, please visit http://www.hrsdc.gc.ca/en/gateways/nav/top_nav/program/cesg.shtml
