Author Topic: Canada Student Loan Application -- and Divorce question!  (Read 10994 times)

Goldielocks

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Canada Student Loan Application -- and Divorce question!
« on: April 05, 2017, 10:06:02 PM »
I need your help.  A parent asked at my workshop yesterday, how student loan applications (for dependent kids just entering post secondary) works.

Eg., if you have joint custody -- can you just name the parent with the lower income as the only parent, and just use that income to qualify?   Do you have to put both parents down?   Do you have to get legal paper saying that one parent has majority of custody?

Obviously, this is in absence of any legal divorce paper that mentions post-secondary at all.

Note - Canada student loan --is the specific question, but tell me about FAFSA and divorce, too, as sometimes the rules mirror each other.  Just state which (Canada or US) you are talking about.

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #1 on: April 06, 2017, 12:24:36 AM »
Still looking for your MMM input.... 

in the meantime, I found this out about the Ontario program (from their Q&A on the website)

If a student is in a situation where the parents are divorced, and they are living with the mother, do they have to include the father on the OSAP application? Or does it depend on whether or not the parents have joint custody?
 


If a parent's marital status is divorced (not remarried or common law), then it is the custodial parent or the parent who the student who has last resided with full-time prior to starting full-time post-secondary studies, who completes the OSAP application.  The non-custodial parent is not required to complete the application.  If however, the non-custodial parent is providing support to the child, then the child must report this support as income on the income declaration section of the OSAP application.



So the question is == can the student just declare that they were living with one parent, in order to most advantageously fill out the loan applications?   What investigation or proof is needed to confirm how to apply?

PoutineLover

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #2 on: April 06, 2017, 09:28:22 AM »
My parents weren't divorced when I applied so I'm not sure of the correct answer. However.. OSAP knows your parents' tax situations, they can verify everything, and if you twist the truth to get more money out of them they will ask for it back when they find out. So I'd represent the situation as accurately as possible to avoid trouble further down the line.

Prairie Stash

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #3 on: April 06, 2017, 12:40:42 PM »
If they receive financial support currently, they're probably going to expect the non-custodial parent to continue. Student loans in Canada are a "Last Resort". After all other avenues have been explored you are allowed to get a loan. Attempting to get a loan while hiding potential money is fraud; the forms ask you for all sources and you sign a declaration.

The first step is to have the child ask both parents what they will contribute. Rather than trying to "game the system" has it already been proven that the other parent won't help out? 

Child Support doesn't end at 18, they're still your kids. Its even wore for kids who are estranged; some kids end up taking a year off just to hit the independent qualifications. In 2012 a girl sued her estranged father for university support and won in Alberta. The court basically said that even though the daughter wanted nothing to do with him he still had to pay; since he was already paying child support it was reasonable to assume he had the means. Just because the parents are divorced doesn't mean anything with regards to the child-parent relationship.

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #4 on: April 06, 2017, 05:17:24 PM »
Hmm,  Thanks for the feedback.
I guess my thought wasn't to "hide" spousal support amounts -- but to accurately record it per the Q&A...

The question is more like this:

A)  If parents are divorced - can the child choose which parent fills out the application form, and only use that single parent's income plus support payments at the total income?
                  e.g., does not need to list the second parent's income,only the support monies provided to parent 1.

B) If A is "yes", then can they choose which parent to use as the primary one that fills out the application?  In cases of amicable divorce there is a lot of shared time and flexibilty between the two households by the time the student is in Grade 12...

???     My thought is that the student or parents could choose the lower income parent to be the applicant, as long as they also include support payments, and they do NOT need to record both full incomes.

EXAMPLE

Parent 1 - $50k per year income, plus $7k per year in child support (due to a classic 50/50 split but the other parent is a high earner)
Parent 2 -- $150k in income, and pays child support.

CSL application -- single parent 1, writes down $50k per year income plus $7k per year in child support. = <$60k per year == qualifies for student loan and grants.

If both parents were listed,  or if they applied using Parent 2, the student would NOT get the loan...  ?

Thoughts?   This is how I thought it worked, and matches tax returns.   But does it really work this way?   



Al1961

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #5 on: April 06, 2017, 05:59:38 PM »
Which parent claims the child on their taxes? That's who's income gets included.

The government knows which parent claimed the deduction.

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #6 on: April 06, 2017, 07:47:36 PM »
Which parent claims the child on their taxes? That's who's income gets included.

The government knows which parent claimed the deduction.

But can't you agree jointly to change it a year in advance or the year the student goes to post secondary?

kayvent

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #7 on: April 06, 2017, 07:48:05 PM »
The specific details of this vary by province and each province provides a multitude of resources to find answers. You can also call the specific province's student loan centre. I'd wager a bet that the student is unable to choose what to file (i.e. that there is some explicit rule for their situation).

Generally, the custodial parent is the only parent put on. Keep in mind that in the rare case where the custodial parent pays alimony to the ex-spouse or child support to parent(s) of other children, some provinces allow that to be listed in as an exceptional expense to lower expected contribution to the student's post-secondary endeavor.

While 50/50 joint legal custody is pretty common, true 50/50 physical custody is an anomaly. I'm not sure how any of the provinces would deal with that.

A slight tangent to this whole talk is that in some custody agreements the formula for splitting expenses is provided. For example, an excerpt of my custody agreement reads "Once the Mother becomes employed and in a position to contribute to these expenses [special activities], the Mother shall contribute towards ... on a pro-rata basis in proportion to the parties' income." This is above and beyond child support; if the other custodial parent was required to pay 170$/month for child support, they'd also need to pay (theirIncome/(theirIncome+my income))% of the total of college expenses.
 
EXAMPLE

Parent 1 - $50k per year income, plus $7k per year in child support (due to a classic 50/50 split but the other parent is a high earner)
Parent 2 -- $150k in income, and pays child support.

CSL application -- single parent 1, writes down $50k per year income plus $7k per year in child support. = <$60k per year == qualifies for student loan and grants.

If both parents were listed,  or if they applied using Parent 2, the student would NOT get the loan...  ?

Thoughts?   This is how I thought it worked, and matches tax returns.   But does it really work this way?   

Note: Despite petitions otherwise, child support payments neither deduct from the payer's income or add to the payee's income. Parental tax returns are the primary document used to determine parental contributions. Also note, your example is not realistic. Those incomes together are 3x the median household income, 10x the median individual income and more than enough to support multiple children going to some of the the most expensive universities in Canada. I know because I went to one of them and my total costs were a fraction of those incomes. In other words, a hypothetical student in that scenario would not need student loans in the first place.
« Last Edit: April 06, 2017, 08:07:10 PM by kayvent »

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #8 on: April 06, 2017, 10:49:58 PM »
Thanks Kayvent. 

I did exaggerate the $150k example, to make the question simpler;  but $50k and $90k as incomes are pretty common here. (Note that the average family income in 2014 was $134k for couples with children in BC -- not at all 3x the median income as you assert) ;  and with so much of the family income going towards childcare, then HCOL housing (two sets of housing perhaps with additional blended family members), I am sure some people post divorce, would think that the ability to obtain a student loan is a necessity... especially if they live too far from a school and the kids live on campus, for a total of $17k per year with accommodation / meal plan.     

Aside -- one parent in the class has their child going to school in Ontario, and being out of province, are payng $19k per year with fewer tax credits or grants...than offered to ontario residents. 


    The question was asked in my class, after all.   I believe the parent who asked has less net income coming in than average (guessing $50k and $65k, across the split households), and wanted to know how divorce affects the student loan application.  He indicated that there was not much in their legal papers about paying for post -secondary, except that they had to write up a clause about the RESP and how it could be accessed at the time of divorce.

I have heard divorced friends talk about getting student loans, no problem, when they made (combined) more than we do (combined) and I know we would likely be denied.   I was wondering , too, what that differences look like.  The way they made it sound, like they were able to choose custodial parent / tax credits claiming (the kid moved in with the lower income parent, full time, I believe) prior to the student loan application, but I don't know how that could work.






kayvent

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #9 on: April 07, 2017, 05:03:27 AM »
Thanks Kayvent. 

I did exaggerate the $150k example, to make the question simpler;  but $50k and $90k as incomes are pretty common here. (Note that the average family income in 2014 was $134k for couples with children in BC -- not at all 3x the median income as you assert) ;  and with so much of the family income going towards childcare, then HCOL housing (two sets of housing perhaps with additional blended family members), I am sure some people post divorce, would think that the ability to obtain a student loan is a necessity... especially if they live too far from a school and the kids live on campus, for a total of $17k per year with accommodation / meal plan.     

Aside -- one parent in the class has their child going to school in Ontario, and being out of province, are payng $19k per year with fewer tax credits or grants...than offered to ontario residents. 


    The question was asked in my class, after all.   I believe the parent who asked has less net income coming in than average (guessing $50k and $65k, across the split households), and wanted to know how divorce affects the student loan application.  He indicated that there was not much in their legal papers about paying for post -secondary, except that they had to write up a clause about the RESP and how it could be accessed at the time of divorce.

I have heard divorced friends talk about getting student loans, no problem, when they made (combined) more than we do (combined) and I know we would likely be denied.   I was wondering , too, what that differences look like.  The way they made it sound, like they were able to choose custodial parent / tax credits claiming (the kid moved in with the lower income parent, full time, I believe) prior to the student loan application, but I don't know how that could work.

Aside: Median and average are different measures. If I consult http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil108a-eng.htm it lists the median total family income in BC as 75K. Massaging the table it is from, I see that the median lone-parent income in BC is 26K. I only bring this up because I am "required" to point out the absurdity of those scenarios since we are on the MMM forums. Even in non-mustachian circles it is a lot. In Ontario, the state presumes 65K is a reasonable income for a family of four and expects the family to be able to provide 75% of excess income to go towards post-secondary.

If the student's custodial parent is living in a common-law or married situation with another person for the past five years, that person's income is included typically.

From my understanding, changing the primary physical custodian would work around the system but it would actually need to be done. That could range from fairly easy to comically impractical and costly. For example, in my home province a custody order can only be changed by a judge in a court case that the judge has the option to not even look at.

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #10 on: April 08, 2017, 01:33:57 AM »
I couldn't quickly find the stats reference table with the average incomes that I pulled yesterday.... but I pulled this one with the median incomes.

The difference between this table and just "couple families" from the other stats income table, is that this lists Median income for"Couple Families with Children" at $111,700 for BC, 2014.   The other Cansim income table shows a lower median income number, but includes couples with no children (presumably a lot of couples in their 20's and over 55).

Of course, even this number includes single income families with two parents, so a dual working family income may indeed have a median a bit higher than shown here.  Hard to know.



Prairie Stash

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #11 on: April 09, 2017, 08:25:57 PM »
"If you are classified as Dependent (Group A), your residency is defined as the Canadian province in which your parent(s), step-parent(s), sponsor or legal guardian have lived most recently for 12 continuous months.

If your parents are separated or divorced, or if your parent is single, only one parent's financial information is used to calculate financial need. This is the parent who is your main financial supporter."
https://studentaidbc.ca/apply/eligibility   Actual rule for BC

Main financial supporter doesn't always mean custodial parent, its the one who pays the most to support the child. A child with a millionaire father living with the mother should get the father to pay.

Also if the parent remarries (or common law) then the step-parent is included. There's lots of permutations to this!
« Last Edit: April 09, 2017, 08:31:04 PM by Prairie Stash »

ElleFiji

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #12 on: April 09, 2017, 09:12:22 PM »
You definitely have to talk to the student loan provider in each province. The students are the ones who lose out, when the parents coach them to gain the system. There is a big chance that loans would be issued based upon information provided, and then when the CRA provides the next year's info to the NSLSC, the student finds out that an overpayment was issued, and has to pay that back before getting new loans.

I worked in the department that had to call students to tell them about overpayments. It could be very sad.

Also, for students studying out of province, they need to ask which province to apply in - usually their province of residence, who will be more generous because the fees are based on their province of residence. The student can also check how to change their province during studies (I remember students going to McGill used to sometimes become Quebec residents).

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #13 on: April 09, 2017, 11:39:26 PM »
Thanks for the replies.


I had thought "main financial supporter" meant custodial parent, or parent that claims you on the tax return...  not the simple at face value definition...



Prairie Stash

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #14 on: April 10, 2017, 09:30:35 AM »
Thanks for the replies.

I had thought "main financial supporter" meant custodial parent, or parent that claims you on the tax return...  not the simple at face value definition...
After age 18 or 19 (depending on province), when students typically attend university, they no longer have custodial parents. They are considered adults but parents are still considered as financial supporters.

I'm pretty sure its the custodial (as we use it) for the majority of cases though. However I would gladly transfer tuition credits to my non-custodial parent if they gave me money; which would make them my main financial supporter (I think). Think of a doctor and his SAHP scenario; it would definitely be in the child's best interest to get funding from Dr. Parent.

Remember RESP counts as the parents contribution. If they are receiving RESP money the parents might already be doing all that's required by the loans. Its harder for younger children to qualify for loans, the system allows larger household earnings if you have siblings in school or are minors. Typically that means the youngest in the family won't have access to as much loans.

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #15 on: April 12, 2017, 12:25:54 AM »
Thanks all for your help.  My second class tonight went very well indeed.

I decided to also print the part of the CSL application form that parents fill out, with the informational instructions, and that was well received.

I am quite happy with how this went for my first time!

Prairie Stash

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #16 on: April 12, 2017, 07:26:03 PM »
So...what kind of interesting questions did you get? A better way to say thank you is another question ;)

I hope you enjoy the class, it sounds intriguing

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #17 on: April 13, 2017, 12:45:51 AM »
So...what kind of interesting questions did you get? A better way to say thank you is another question ;)

I hope you enjoy the class, it sounds intriguing

The first class, there were lots of questions about scholarships, but when I got into the weeds of that section, the questions were heavily focused on student loans....  and the calculation for parental contribution according to income.

Then I was amazed that 40% of the class (most parents had 16-18 year olds) had been investing / paying for group scholarship funds...   I thought maybe one person (and I only had one slide about insurance products that are tax advantaged ways to save money, with a big "DONT" beside the group funds...), but whoa, 40%.   I think they were bummed out because I talked eloquently about the favorable RESP self directed opportunities to save money and the flexibilty in redeeming the amounts contributed.

I had to be careful to say things like -- as long as you end up with more money coming out that you put in, consider it  a win and don't sweat about it.    Talk to your company to find out what restrictions there are on withdrawing (even to pay for education there are stiff limits), and a lot of "remember, RESPs were updated less than 15 years ago, and 30 years ago, insurance products like this were one of the only tax advantaged ways to save, which is why they are popular... and indicate that once you are in them for 15 years, you may as well hold on for 2 more because of the early penalties.

One parent wants to fund scholarships to help send her 18 year old directly into private computer animation classes at twenty thousand per year in tuition alone.   A school that many go to after working for a while, and still don't get better animating jobs coming out of it.   arghhh.

A little bit of discussion on loan forgiveness and free money around canada student loans when you graduate.

RetiredAt63

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #18 on: April 22, 2017, 05:59:37 AM »
Late to the party, but can confirm that, at least for Ontario, it is the parent with whom the student lives, or has an address with (if university is not near home) that the income counts for.  That is how it worked for DD, and we were separated, not yet divorced, at the time.  DD had to declare all income for loan calculation (support from both of us plus what she made at summer jobs), but it was only my income and my signature on the form.

Prairie Stash

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #19 on: April 24, 2017, 12:45:55 PM »

Then I was amazed that 40% of the class (most parents had 16-18 year olds) had been investing / paying for group scholarship funds...   I thought maybe one person (and I only had one slide about insurance products that are tax advantaged ways to save money, with a big "DONT" beside the group funds...), but whoa, 40%.   I think they were bummed out because I talked eloquently about the favorable RESP self directed opportunities to save money and the flexibilty in redeeming the amounts contributed.

I had to be careful to say things like -- as long as you end up with more money coming out that you put in, consider it  a win and don't sweat about it.    Talk to your company to find out what restrictions there are on withdrawing (even to pay for education there are stiff limits), and a lot of "remember, RESPs were updated less than 15 years ago, and 30 years ago, insurance products like this were one of the only tax advantaged ways to save, which is why they are popular... and indicate that once you are in them for 15 years, you may as well hold on for 2 more because of the early penalties.

One parent wants to fund scholarships to help send her 18 year old directly into private computer animation classes at twenty thousand per year in tuition alone.   A school that many go to after working for a while, and still don't get better animating jobs coming out of it.   arghhh.

A little bit of discussion on loan forgiveness and free money around canada student loans when you graduate.
I had one of those group scholarships for a week, I reviewed the literature and cancelled (I do that a lot, I have no qualms cancelling). The catch I that if you stop contributions at any point you lost all the gains and it was spread out across all the remaining recipients. It allowed them to invest conservatively and have pretty good payouts! Of course it was always "the other guy" who stopped payouts, the other guy is paying for those scholarships. It seems wrong to me, labeling someone's loss as a scholarship for your own child.

Let me reiterate, early cancellation of the plan meant a forfeiture of all your gains, you still pay the upfront fees and you could lose government grants entirely. There's really no way out after a few years. The loss of the grants alone could be a 20% hit.

They're better than nothing (maybe) but the one I was sold had huge upfront costs. After 3 years you break even, assuming market growth and government matching stayed constant. They do front end loading to make sure they get paid if there's doubts later on.

kayvent

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #20 on: April 24, 2017, 07:29:55 PM »

Then I was amazed that 40% of the class (most parents had 16-18 year olds) had been investing / paying for group scholarship funds...   I thought maybe one person (and I only had one slide about insurance products that are tax advantaged ways to save money, with a big "DONT" beside the group funds...), but whoa, 40%.   I think they were bummed out because I talked eloquently about the favorable RESP self directed opportunities to save money and the flexibilty in redeeming the amounts contributed.

I had to be careful to say things like -- as long as you end up with more money coming out that you put in, consider it  a win and don't sweat about it.    Talk to your company to find out what restrictions there are on withdrawing (even to pay for education there are stiff limits), and a lot of "remember, RESPs were updated less than 15 years ago, and 30 years ago, insurance products like this were one of the only tax advantaged ways to save, which is why they are popular... and indicate that once you are in them for 15 years, you may as well hold on for 2 more because of the early penalties.

One parent wants to fund scholarships to help send her 18 year old directly into private computer animation classes at twenty thousand per year in tuition alone.   A school that many go to after working for a while, and still don't get better animating jobs coming out of it.   arghhh.

A little bit of discussion on loan forgiveness and free money around canada student loans when you graduate.
I had one of those group scholarships for a week, I reviewed the literature and cancelled (I do that a lot, I have no qualms cancelling). The catch I that if you stop contributions at any point you lost all the gains and it was spread out across all the remaining recipients. It allowed them to invest conservatively and have pretty good payouts! Of course it was always "the other guy" who stopped payouts, the other guy is paying for those scholarships. It seems wrong to me, labeling someone's loss as a scholarship for your own child.

Let me reiterate, early cancellation of the plan meant a forfeiture of all your gains, you still pay the upfront fees and you could lose government grants entirely. There's really no way out after a few years. The loss of the grants alone could be a 20% hit.

They're better than nothing (maybe) but the one I was sold had huge upfront costs. After 3 years you break even, assuming market growth and government matching stayed constant. They do front end loading to make sure they get paid if there's doubts later on.

I have alluded to this in these forums before but never actually stated this. I actually have such a group RESP. My reasons for doing so are ....well—you've read about their arcane rules and restrictions. Someone needs to have some odd circumstances to consider that the best option.

PoutineLover

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #21 on: April 25, 2017, 09:02:02 AM »
I got money from an RESP and from a knowledge first fund. Not sure what the terms and conditions were but it was super helpful to have those funds. If you have a fairly traditional situation I think it's a good way to fund university, I'm pretty sure my parents made regular contributions when I was growing up and I ended up getting a few thousand every semester. Maybe it wouldn't work so well for someone who took a gap year or chose a non-standard post-secondary education, but that's up to each family to consider and plan for.

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #22 on: April 25, 2017, 09:02:18 AM »

Then I was amazed that 40% of the class (most parents had 16-18 year olds) had been investing / paying for group scholarship funds...   I thought maybe one person (and I only had one slide about insurance products that are tax advantaged ways to save money, with a big "DONT" beside the group funds...), but whoa, 40%.   I think they were bummed out because I talked eloquently about the favorable RESP self directed opportunities to save money and the flexibilty in redeeming the amounts contributed.

I had to be careful to say things like -- as long as you end up with more money coming out that you put in, consider it  a win and don't sweat about it.    Talk to your company to find out what restrictions there are on withdrawing (even to pay for education there are stiff limits), and a lot of "remember, RESPs were updated less than 15 years ago, and 30 years ago, insurance products like this were one of the only tax advantaged ways to save, which is why they are popular... and indicate that once you are in them for 15 years, you may as well hold on for 2 more because of the early penalties.

One parent wants to fund scholarships to help send her 18 year old directly into private computer animation classes at twenty thousand per year in tuition alone.   A school that many go to after working for a while, and still don't get better animating jobs coming out of it.   arghhh.

A little bit of discussion on loan forgiveness and free money around canada student loans when you graduate.
I had one of those group scholarships for a week, I reviewed the literature and cancelled (I do that a lot, I have no qualms cancelling). The catch I that if you stop contributions at any point you lost all the gains and it was spread out across all the remaining recipients. It allowed them to invest conservatively and have pretty good payouts! Of course it was always "the other guy" who stopped payouts, the other guy is paying for those scholarships. It seems wrong to me, labeling someone's loss as a scholarship for your own child.

Let me reiterate, early cancellation of the plan meant a forfeiture of all your gains, you still pay the upfront fees and you could lose government grants entirely. There's really no way out after a few years. The loss of the grants alone could be a 20% hit.

They're better than nothing (maybe) but the one I was sold had huge upfront costs. After 3 years you break even, assuming market growth and government matching stayed constant. They do front end loading to make sure they get paid if there's doubts later on.

I had a friend that kept up with it, and now her daughter is going to college next year, and the amount is not the $80-90k that they sold them on, but more like just under $40k.  They kept up with the payments, but because others did not drop out as much as they did 20 years ago (likely because of losing the RESP amounts now, more kids actually go to college), and because returns are / were less in the past couple of decades than the projections, it is much less.   

Getting half what you planned for is a definite bummer for their kid, who was planning on going to medical school or graduate science research fields.  (and needs to move away from home to go to college)

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #23 on: April 25, 2017, 09:15:45 AM »
Kayvent --

As I told the class, insurance products certainly have their place in a financial plan, and even basic whole life products have some unique advantages for savings that I hope means they can be usable again in future (currently negated by the low returns).

The comparative advantages for the RESP did not really start until 1998 when the grants started, before that insurance group products were better than plain old tax-deferred RESPs without grants.   Then with the flexibility of family plans and ways to use the grants opened up after 2006 (approx.).   Before that group insurance products were sold and successful because there was a gap in the market that needed to be filled.   With a strong base / trend behind them, the group default / benefit feature to bump up your own returns,  strong sales people (generally on high commissions), and reaching out to people with kids under the age of 2, who likely had not yet learned about alternatives,  these were an easy sell.

I know that the Heritage scholarship has very high fees / commissions to the sales staff (because I helped a friend review if she wanted to become an employee selling these).   There should be other group RESP products out there that are lower cost.  There is no reason why these should not work, and be a good deal, other than the insurance company choices on how the policies are restricted or the fees, one of the worst being a severely reduced list of schools that you can use them with, they can only be used for direct school costs to qualify, and limits on how you withdraw the money (you get your contributions first, can only take so much each year, and the AIP portion / grant money is the last amount taken, so anyone quitting after taking 3/4 of their money don't get the remainder).


Prairie Stash

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #24 on: April 25, 2017, 10:58:14 AM »
I had a friend that kept up with it, and now her daughter is going to college next year, and the amount is not the $80-90k that they sold them on, but more like just under $40k.  They kept up with the payments, but because others did not drop out as much as they did 20 years ago (likely because of losing the RESP amounts now, more kids actually go to college), and because returns are / were less in the past couple of decades than the projections, it is much less.   

Getting half what you planned for is a definite bummer for their kid, who was planning on going to medical school or graduate science research fields.  (and needs to move away from home to go to college)
Any idea what your friend contributed? That sounds pretty scary

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #25 on: April 25, 2017, 09:42:14 PM »
I had a friend that kept up with it, and now her daughter is going to college next year, and the amount is not the $80-90k that they sold them on, but more like just under $40k.  They kept up with the payments, but because others did not drop out as much as they did 20 years ago (likely because of losing the RESP amounts now, more kids actually go to college), and because returns are / were less in the past couple of decades than the projections, it is much less.   

Getting half what you planned for is a definite bummer for their kid, who was planning on going to medical school or graduate science research fields.  (and needs to move away from home to go to college)
Any idea what your friend contributed? That sounds pretty scary

My guess is that it is similar to having contributed the same amount to an  RESP invested primarily in fixed income or balanced funds.  They contributed a lot more than we did in the first 8 years, on a monthly basis.

Maybe $150 per month for 16 years?  (plus the CESG of 20%)

Prairie Stash

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #26 on: April 26, 2017, 08:53:28 AM »
I had a friend that kept up with it, and now her daughter is going to college next year, and the amount is not the $80-90k that they sold them on, but more like just under $40k.  They kept up with the payments, but because others did not drop out as much as they did 20 years ago (likely because of losing the RESP amounts now, more kids actually go to college), and because returns are / were less in the past couple of decades than the projections, it is much less.   

Getting half what you planned for is a definite bummer for their kid, who was planning on going to medical school or graduate science research fields.  (and needs to move away from home to go to college)
Any idea what your friend contributed? That sounds pretty scary

My guess is that it is similar to having contributed the same amount to an  RESP invested primarily in fixed income or balanced funds.  They contributed a lot more than we did in the first 8 years, on a monthly basis.

Maybe $150 per month for 16 years?  (plus the CESG of 20%)
The fees can tear a big hole in the returns.

$150/month*16 years+20% CESG top-up is $34560. Getting $40,00 back, is it better than what I would have received from my high interest savings account? 6 years ago I was getting 3% at ING, its down to 0.8% now. 

Goldielocks

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Re: Canada Student Loan Application -- and Divorce question!
« Reply #27 on: April 26, 2017, 10:29:34 PM »
I had a friend that kept up with it, and now her daughter is going to college next year, and the amount is not the $80-90k that they sold them on, but more like just under $40k.  They kept up with the payments, but because others did not drop out as much as they did 20 years ago (likely because of losing the RESP amounts now, more kids actually go to college), and because returns are / were less in the past couple of decades than the projections, it is much less.   

Getting half what you planned for is a definite bummer for their kid, who was planning on going to medical school or graduate science research fields.  (and needs to move away from home to go to college)
Any idea what your friend contributed? That sounds pretty scary

My guess is that it is similar to having contributed the same amount to an  RESP invested primarily in fixed income or balanced funds.  They contributed a lot more than we did in the first 8 years, on a monthly basis.

Maybe $150 per month for 16 years?  (plus the CESG of 20%)
The fees can tear a big hole in the returns.

$150/month*16 years+20% CESG top-up is $34560. Getting $40,00 back, is it better than what I would have received from my high interest savings account? 6 years ago I was getting 3% at ING, its down to 0.8% now.

Ah,  but they were told / sold on the fact that it would be $80k to $90k,  not $40k, which beats any other return (due to the defaulting of others), and is the reason why they did this for the first two kids, and a modified version of it for kid three.  To have half of what was "promised" after only 10-12 years after their last sales pitch would be frustrating.