Children's Aid societies in Ontario will be helping thousands of foster kids reach a higher education by investing federal grants into a registered education savings plans.
Currently, children under the age of six receive $100 a month from Ottawa's Universal Child-Care Benefit plan. The societies have received that money on behalf of the kids since 2006 and have been holding it in a special account until it received further direction.
Ontario has now directed that those funds be invested into an RESP managed by Royal Bank. The bank is not charging the societies for the service.
The money will be compounded by additional federal funds -- Canada Learning Bond payments plus an annual payment from a Canada educational savings grant, which will match a certain percentage of the funds in the RESP.
"It's really quite visionary and innovative," said Jeanette Lewis, executive director of the Ontario Association of Children's Aid Societies.
"Children who grow up in state care have the same kind of goals, hopes that they'll have a profession, a technical career, that they'll be able to go to some kind of post-secondary school," she told CTV's Canada AM Thursday. "This kind of a program helps them see that they can have a goal and have some way that these monies can grow and set aside from that."
If $1,200 were to be contributed annually from birth to age six, Ottawa would contribute $340 in matching funds plus $1,000 in Canada Learning Bond payments.
The RESP could amount to $23,000 by the time a child in foster care turns 18 and is looking to attend college or university. The funds would amount to less if the child entered into foster care late in his childhood and didn't have the money invested.
"It may not be enough," Lewis warned. "It sounds like a lot of money today but 15 years from now who knows what that will buy but nonetheless it's a beginning and it's a way for societies can establish a plan... so that there will be resources for all kids in Ontario."
The societies will manage the account until the child attends post-secondary school or turns 25 years old. At that point, if they choose not to attend college or university, the child receives the money plus the accrued interest but will have to return the federal grants back to Ottawa.
If the youth can't be located, the federal grants would be returned to Ottawa but the rest of the money would be distributed among other RESPs managed by the societies.
The money will also be compounded by the new Ontario Child Benefit, given to low-income children.
At first, foster children were denied the provincial benefit but in February, Ontario's Children and Youth Minister Deb Matthews said she would correct the oversight.
Gail Vandermeulen, the director of projects and standards for the OACAS, said they are still waiting for further direction on what to do with the provincial benefits.
Currently, there are about 19,000 children in the care of aid societies. About 5,000 of them are under six years old and receiving federal benefits.
About 40 per cent of youth in the general population attend post-secondary school, but only about 21 per cent of youth that are under the care of Children's Aid societies pursue a higher education.
