RESP Guide for Canadian Parents: Grants, Limits, and Benefits
Higher education has always been a gateway to opportunity. But in Canada, opportunity comes at a price, and that price is steadily climbing. Families across the country are asking: How can we prepare for the rising cost of tuition, books, and living expenses without putting our kids or ourselves into years of debt?
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One of the most effective tools available is the Registered Education Savings Plan (RESP). While it may sound technical, the RESP is simply a way to save for your child’s future with help from the government. Here’s what you need to know.
The Rising Cost of Education
It’s no secret that post-secondary education in Canada is expensive. The average undergraduate tuition for Canadian students in 2023–24 was $7,076 per year, and that’s just tuition. When you add books, housing, transportation, food, and other expenses, the cost can reach $20,000–$30,000 per year depending on the city and program.
That means a four-year degree could easily cost more than $100,000. And while some students offset this through part-time work, scholarships, or loans, starting adult life with tens of thousands in debt can be a heavy burden.
This is why starting early with a dedicated education savings plan can make a significant difference.
What is an RESP?
A Registered Education Savings Plan (RESP) is a tax-advantaged account designed to help Canadians save for a child’s post-secondary education.
Who can open one? Parents, guardians, grandparents, or even family friends.
Who benefits? The child (known as the beneficiary).
Contribution limits: There’s no annual cap, but there is a lifetime contribution limit of $50,000 per child.
Government incentives: The government contributes through grants, making it one of the most generous savings vehicles available.
Unlike an RRSP, RESP contributions are not tax-deductible. But the real advantage lies in tax-sheltered growth and government grants.
How RESPs Work
1. Tax-Free Growth
Money invested in an RESP grows tax-free. You can choose how to invest—mutual funds, ETFs, GICs, or savings accounts, depending on your provider.
2. Government Grants
The biggest advantage of an RESP is the Canada Education Savings Grant (CESG). The federal government matches 20% of your annual contributions up to $2,500 per child. That means an extra $500 every year. Over time, a child can receive up to $7,200 in CESG grants.
Families with lower incomes may also qualify for:
Additional CESG: an extra 10–20% on the first $500 contributed each year.
Canada Learning Bond (CLB): up to $2,000 total for children from low-income households, without requiring personal contributions.
3. Withdrawals
When your child enrolls in an eligible post-secondary program, the RESP can be used for tuition, books, housing, and other related expenses. Withdrawals are divided into:
Contributions: Returned tax-free to the subscriber.
Grants and investment income (Educational Assistance Payments, or EAPs): Taxed in the student’s hands, which usually means little to no tax, since most students have low income.
Why Starting Early Matters
The earlier you start saving, the more you benefit from compound growth and government grants.
For example:
Contributing $2,500 annually starting at birth could generate $7,200 in CESG grants alone.
With modest investment returns (say, 5% annually), that could grow to $60,000+ by the time your child is ready for university.
Even smaller contributions make a difference. Setting aside $50 per month from the time your child is born could grow into tens of thousands over 18 years. The combination of regular savings, government support, and investment growth creates powerful momentum.
What If Your Child Doesn’t Go to University?
One common worry is: What if my child doesn’t pursue post-secondary education?
RESPs offer flexibility:
The plan can stay open for up to 35 years. Your child may decide later to attend college, university, trade school, or an apprenticeship.
Funds can be transferred to another child’s RESP.
Up to $50,000 in earnings can be transferred to your RRSP if you have contribution room.
You can withdraw your own contributions anytime (though government grants must be returned if not used for education).
This makes an RESP a relatively low-risk option. Even if plans change, your savings don’t go to waste.
Where to Open an RESP
RESPs are widely available, but not all plans are created equal. You’ll want to consider fees, flexibility, and investment choices. Options include:
Big banks and credit unions – Convenient if you already bank there, with a range of investment choices.
Online brokerages (e.g., Questrade, Wealthsimple) – Lower fees and more control for DIY investors.
RESP providers (group plans) – Structured but often less flexible, with higher fees. PLEASE read the fine print carefully.
The right provider depends on your comfort level with investing, your financial goals, and whether you want hands-on control or a managed plan.
The Bottom Line
The cost of education in Canada is rising, and relying on student loans or last-minute savings is risky. An RESP is one of the most powerful tools available for parents and families. With tax-sheltered growth, generous government grants, and long-term flexibility, it can turn small, consistent contributions into a major resource for your child’s future.
Education may come with a price tag, but with the right planning, it doesn’t have to come with crippling debt. By starting early with an RESP, you give your child more than just financial support—you give them freedom, opportunity, and the confidence to pursue their goals without financial chains holding them back.