Although wealthier families are more likely to utilize registered education savings plans (RESPs), children from families with RESPs are more likely to pursue higher education — even controlling for income and other factors that drive the pursuit of post-secondary education, according to a new Statistics Canada (StatsCan) study released on Wednesday.
The StatsCan study, which examines the RESP market, finds families in the top quintile of the after-tax income distribution had $15,915 in RESP investments in 2012 compared with $2,072 for families in the bottom income quintile. In addition, the study says two-thirds of families in the top quintile have an RESP account compared with just one-quarter of families in the bottom quintile.
Indeed, the study notes that RESP investments are more concentrated in families with higher income, greater wealth and higher levels of parental education. Furthermore, it reports that the kids from families with an RESP account are more likely to pursue a post-secondary education.
Overall, the study found that 75.4% of children whose families had an RESP by the time the child was 15 years old were attending a post-secondary institution by age 19; for families that didn’t have an RESP by age 15, 59.7% went on to post-secondary education by age 19.
“The difference partly reflects the fact that parents who did invest in RESPs were generally more highly-educated than parents who did not,” the StatsCan study says. “Also, parents tended to invest more in RESPs when their children performed better at school.”
Although parental education and academic performance are primary predictors of post-secondary education, the StatsCan also found that after controlling for differences in these factors, kids with an RESP were still more likely to enter post-secondary education — although the difference was reduced to 5.9 percentage points.
This difference was about the same for families in both the top and bottom of the income distribution, the StatsCan study finds.
The difference in postsecondary enrolment rates between RESP holders and non-holders fell to 2.7 percentage points from 5.9 percentage points by the age of 27, StatsCan also reports.
“By age 27, there was no association between RESPs and post-secondary education among youth from families in the top and bottom income quintiles,” the study finds.
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