ACES Plan Grant Cancelled: What it Means for Children in Alberta with RESPs
Faced with a record $5 billion deficit in the next year, the Alberta government is cancelling the Alberta Centennial Education Savings (“ACES”) Plan Grants. The Conservatives announced the closure of the popular grant on March 26, 2015. The $19 million program provided an initial grant of $500 and subsequent grants of $100 (for children ages 8, 11 and 14) for children in Alberta with RESPs. For the cash-strapped government, axing the ACES Plan Grant will save an estimated $13 million in 2015-16 and $19 million each year going forward.
Conservatives Draw Criticism for Cancelling ACES Plan Grant
Registered Education Savings Plan (RESP) providers like the Heritage Education Funds are concerned that the cancelling of the ACES Plan Grant will have a ripple effect, driving down savings rates in Alberta. With the household debt to income ratio hitting a record level 163.3 percent in the fourth quarter of 2014, this is just more reason for parents to choose debt over savings. The initial $500, which offered parents in Alberta a further incentive for opening an RESP for their child, is no longer there. Although parents still qualify for the Canada Education Savings Grant (CESG), parents in Alberta won’t get that added incentive for opening an RESP for their child. Unlike the CESG, every parent in Alberta who qualified for the ACES Plan Grant received the initial $500 regardless of family income.
According to government statistics, almost 400,000 ACES Plan Grants were paid out from January 1, 2005 to December 31, 2014. In fact, nearly 280,000 children had contributions of $132 million made to their RESPs. This puts Alberta behind only Ontario and B.C. for the third highest RESP participation rate in Canada.
Conservatives Claim ACES Plan Grant Not Living Up to Potential
According to the Alberta government website, the ACES Plan Grant was under review the last couple of years, before the final decision was made to cancel it. While the Conservatives have been criticized for cancelling the grant, the Tories claim the program wasn’t meeting its objectives.
When the ACES Plan Grant was introduced in 2005 by then-premier Ralph Klein, it was supposed to boost the RESP participation rate in Alberta. Instead, the participation rate actually fell by two percent between 2005 and 2010, according to provincial statistics. With only
17 percent of low-income families taking advantage of the ACES Plan Grant, the program wasn’t living up to its potential, say the Tories.
What the Cancellation of the ACES Plan Grant Means for Your Family
If you’re a parent in Alberta with an RESP for your child, don’t throw your hands up in despair. The good news is you may still qualify for the ACES Plan Grants. If your child was born on or before March 31, 2015, you still qualify for the initial $500 ACES Plan Grant. If your child reaches ages 8, 11 or 14 before March 31, 2015, you still qualify for the $100 grant. It’s important you submit your application and supporting documents as soon as possible. The deadline for applying for the grant is July 31, 2015.
For more information on the closure of the ACES Plan Grant or to have a Heritage representative contact you to get started — before it’s too late — visit our Alberta Centennial Educational Savings (ACES) Program page.
The Find A Representative Tool available on the HeritageRESP.com website can help you speak to a local Alberta Heritage RESP Dealing Representative to clarify any further questions.