educational funding

Scholarship Trust Foundation

Many people have become familiar with the terms "Scholarship Plan" and "Registered Education Savings Plan" The Scholarship Trust Foundation has compiled 15 of the most frequently asked questions about this unique plan for higher education.

  1. What is the Scholarship Trust Foundation?
  2. What is the Scholarship Trust Plan?
  3. How does the plan work?
  4. How much may I contribute?
  5. What is the Canada Education Savings Grant? Is the Scholarship Trust Plan eligible to receive it?
  6. At maturity, if my child does not continue his or her education, do I get my deposits back?
  7. What about the interest that accumulated on my deposits? That’s lost, right?
  8. Are there any income tax benefits?
  9. What are the rates of interest earned on the deposits?
  10. Are my deposits at risk?
  11. What if my finances change? Can I make changes to my plan?
  12. What if my spouse or I die or become completely disabled before all of the deposits are made?
  13. Are there any extra fees or expenses that I must pay to enroll in the plan’
  14. Who can enroll a child in the plan?
  15. Why should I start a Plan today’

1.

What is the Scholarship Trust Foundation
 

The Scholarship Trust Foundation is a non-profit corporation, incorporated in 1986 under the Canada Corporations Act for the purpose of "Encouraging and promoting the advancement of higher education by the provision of Scholarships and other assistance to young Canadians".

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2.

What is the Scholarship Trust Plan?
 

The Scholarship Trust Plan is a trust which holds property under a Registered Education Savings Plan (R.E.S.R), a cooperative savings plan which was established for the purpose of helping parents save towards the ever increasing cost of a post-secondary education.

The plan is distributed by Canadian American Financial Corp. (Canada) Limited, a subsidiary of Allianz Life Insurance Company of North America, one of the world’s largest insurance organizations, with over 550 billion Canadian dollars in invested assets.

The Allianz organization is over 100 years old.

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3.

How does the plan work?
 

This is a time-limited goal directed savings program for parents (or other sponsors) on behalf of children who are under 14 years of age at the time of enrollment. You save towards the first year of post-secondary education, and the Foundation will provide cash scholarships towards the second, third and fourth year.

It’s that simple!

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4.

How much may I contribute?
 

In February 1997, the Federal Government increased RESP annual contributions to $4,000.00 per child, with a $42,000.00 lifetime maximum. Depending on the age of the child, you could begin a starter plan for as little as $4.73 per month.

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5.

What is the Canada Education Savings Grant? Is the Scholarship Trust Plan eligible to receive it?
 

To help parents save toward their children’s post-secondary education, the Federal Government introduced the Canadian Education Savings Grant (CESG). The Grant will match 20 percent of the first $2,000 of annual contributions made to RESP5 for children up to age 18. The maximum grant will be $400 per child per year.

Enrolling your children in a Plan will allow them to benefit from the government grant. Please note that the Canada Education Savings Grant of up to $7,200 lifetime maximum is not included in calculating the annual or lifetime R.E.S.P. contribution limits.

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6.

At maturity, if my child does not continue his or her education, do I get my deposits back?
 

Absolutely! Your savings are always yours, and will be returned at maturity.

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7.

What about the interest that accumulated on my deposits? That´s lost, right?
 

Not so! The built in Self-Determined Option enables you to withdraw your interest earned along with your savings (less Membership Fees), to be paid out in whole or in part at any time, up to 25 years after enrollment. You only need to be sure that you choose this option at least 60 days prior to the maturity date of your plan.

To qualify for this option the Nominee must attend a minimum 3-week program of not less than 10 hours per week at a recognized post-secondary institution. Also, under certain conditions, you can roll over up to $50,000 of your interest into your or your spouse’s R.R.S.R, or withdraw it in cash (subject to taxes).

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8.

Are there any income tax benefits?
 

YES. By enrolling your child in the Scholarship Trust Plan you will have a Registered Education Savings Plan (RESP #1011001) in which your deposits are tax sheltered under the Income Tax Act of Canada.

No tax is payable by the Member on interest earned on savings. Scholarship awards or Self-Determined payments are taxable in the hands of the student, whose tax liability is typically low or nonexistent due to the low income and high exemption status of most students.

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9.

What are the rates of interest earned on the deposits
 

There is no easy way to answer this question as the interest rates vary due to the current market conditions. One of the advantages of the HST Plan is that interest accumulates tax-free, which greatly enhances the return. Not to mention the additional 20% government grant. Your local Enrolment Officer can advise you of our most current yield and Member’s Total Return.

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10.

Are my deposits at risk?
 

Your deposits are safe and secure Contributions and interest earned are invested in Government issued or guaranteed securities.

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11.

What if my finances change? Can I make changes to my plan?
 

YES. You can increase or decrease the deposit amount when your needs change. We encourage Members to contribute only what they can comfortably afford. Additional units can be added at any time, provided the child is still under 14 years of age.

The only limit on your deposits is the Federal Government maximum tax entitlement of $4,000.00 in deposits per calendar year, per child (lifetime maximum of $42,000 per Nominee). Maximizing your savings will also maximize the scholarships available to your child, due to the power of compound interest.

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12.

What if my spouse or I die or become completely disabled before all of the deposits are made?
 

The Plan offers an optional protection benefit which ensures that in the event of your premature death or total disability your future deposits will be made on your behalf securing your child’s Plan and the most affordable and important gift you can give your child. . . a post-secondary education

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13.

Are there any extra fees or expenses that I must pay to enroll in the plan?
 

There are two types of fees that are paid by the Member that are used to administer the plan. The Membership Fee is $100 per unit, and is deducted from early deposits.

The Scholarship Trust Plan is the ONLY national scholarship trust plan that provides a FULL REFUND OF AN AMOUNT EQUAL TO THE MEMBERSHIP FEE at maturity (without your Nominee having to qualify for scholarships), unless the Self-Determined option is chosen.

The Depository Charge is deducted from savings. There is one charge per Agreement per year, and it varies depending on the method of payment chosen.

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14.

Who can enroll a child in the plan?
 

Any person of legal age (18 or older) who wishes to help provide for a child’s future education can enroll in the plan.

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15.

Why should I start a Plan today?
 

You can rest easy knowing that when it comes time for a higher education you’ll be in a better position to afford it.

Starting today will get the power of compound interest working for you and your child immediately If you don’t use the $4,000 00 annual R.E.S.P. contribution limit by December 31st, you lose it.

Your child’s Plan will benefit from the 20% Canada Education Savings Grant instantly.

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