Daily Bread Food Bank announces Education Savings Program to help break poverty cycle
Canadian Scholarship Trust Foundation facilitates starting an RESP for Daily Bread clients
The Daily Bread Food Bank announced today a new partnership designed to help break the poverty cycle through an accessible education savings program. Recognizing the importance of saving for post-secondary education in reducing the barriers to higher education and encouraging self-sustainability, Daily Bread and Canadian Scholarship Trust Foundation (C.S.T.) have partnered to help low-income families take advantage of the Canada Learning Bond (CLB) program by setting up a Registered Education Savings Plan (RESP).
Daily Bread clients interested in the program will be referred to C.S.T. Consultants Inc., a wholly-owned subsidiary of C.S.T. and the distributor of the Canadian Scholarship Trust Plan, through a dedicated toll free number for more information from specially-trained representatives. C.S.T. will waive the usual set-up fee and minimum contribution requirement for eligible Daily Bread clients.
"This is a significant program for Daily Bread clients to help break the cycle of poverty and help their children get a higher education," said Gail Nyberg, executive director of the Daily Bread Food Bank. "Our mandate extends beyond feeding hungry people and eliminating the need for food banks. About one third of Daily Bread's clients need assistance beyond food. Helping our clients take advantage of the CLB will help break affordability barriers to post-secondary education, increasing self-sustainability."
A survey conducted last year by Daily Bread found that 71 per cent of clients with children who were eligible for the CLB would participate in an RESP program. Of the Daily Bread clients who said they would participate, 49 per cent said they could save some of their own money to contribute to an RESP - an average $45.50 per month.
Studies show that parents' attitudes toward, and saving for, post-secondary education communicate a strong message to their child about the value of pursuing higher education - and set the expectation that the child will go on past secondary school. According to Statistics Canada, young Canadians who had savings put aside for their post-secondary education either by themselves, their parents or others were more likely to take some post-secondary education (74 per cent compared with 50 per cent).
"C.S.T. is committed to helping more families facing financial barriers to post-secondary education overcome those barriers by saving," said John Kearns, President, Canadian Scholarship Trust Foundation. "Research tells us that 50 per cent of Canadians are not saving for higher education and of even greater concern is that only 26 per cent of families with incomes under $25,000 are saving. This partnership with Daily Bread is part of a long-term strategy designed to change the dialogue around the kitchen table. Every bit saved counts and not only helps defray the future costs of college or university - it helps the child believe that a post-secondary education is an attainable dream."
The CLB was established by the Federal Government to provide up to $2,000 for the future post-secondary education of children in lower income families. Canadian children born January 1, 2004 or later who are also eligible for the National Child Benefit Supplement (NCBS) are eligible (this generally applies to those families with a total annual income under $35,000).
An initial $500 CLB will be provided in the first year of eligibility for the CLB. Subsequently, children qualify for additional $100 CLB installments (until age 15), one for each year in which they are entitled to the NCBS. The maximum CLB amount is $2,000 per child.
Daily Bread clients will be enrolled in individual RESPs where they can access the CLB and maintain their plans even if they are not able to contribute beyond what they are eligible for from the government. The CLB will be invested along with any additional contributions that Daily Bread clients can make and will accumulate investment income inside the RESP.
Daily Bread clients who can contribute beyond the CLB will also be eligible for the Canada Education Savings Grant (CESG). For CLB eligible families, the CESG adds 40 per cent to the first $500 in annual contributions made into an RESP and 20 per cent on the next $1,500 - as much as $500 each year to a maximum of $7,200.
There is strong evidence that government incentive programs are an effective tool in encouraging saving. Since the federal government started providing a 20 per cent match on contributions to Registered Education Savings Plans in 1998, education savings have exploded. The number of children with savings plans grew from roughly 700,000 in 1997 to more than two million in 2005 - an increase of close to 200 per cent in seven years.
Daily Bread Food Bank is dedicated to fighting hunger. Each month, a record high 175,000 people in the GTA rely on food relief programs. Daily Bread serves the majority of these people through its network of neighbourhood food banks and meal programs in over 160 member agencies. In an effort to eliminate the need for food banks, Daily Bread educates the public, conducts research and advocates realistic government policies. It is a non-profit, charitable organization.
The Canadian Scholarship Trust Foundation, founded in 1960, is the oldest and largest provider of RESPs in Canada, with $2 billion in assets under administration. Its mission is to promote the benefits of higher education and improve access by reducing financial barriers.