RESPs: The Easy Way To Save

Students today face a broad selection of post-secondary options to explore, ranging from technical colleges and training institutions, to traditional university settings. Your future student may face even more options.

As the cost of education continues to rise, the dream of being able to say to your child, "you can go", may be out of reach for many parents.

We Can Help

We understand that planning for their future can be daunting, but it doesn't have to be. A Registered Education Savings Plan (RESP) is the most effective way for parents to prepare - it's also easy.

As one of Canada's most experienced group RESP providers, we've helped hundreds of thousands of parents save for their children's higher education. We created Canada's first education savings plan in 1960 under one guiding principle: improve access to higher education for all Canadians by reducing the associated financial barriers.

That continues to be our goal to this day.

RESPs: The Basics

A Registered Education Savings Plan (RESP) enables parents to start preparing now for the education choice their child will make in the future. Parents put money away while their children are growing up to help ease the future financial burden associated with college, university or other post-secondary education.

How RESPs Work

RESPs are established under the Federal Income Tax Act to allow contributors to save for a child's post-secondary education on a tax-deferred basis. Investment income grows tax-free and is not taxable while inside the RESP. The concept is similar to an RRSP, but unlike RRSPs, contributions to RESPs are not tax-deductible.

When the child becomes a post-secondary student, the investment income earned in the RESP will be included in the child's taxable income, not in the contributor's taxable income. The advantage to you is that students generally have lower or no income, so very little tax needs to be paid. The principal is returned tax-free.

Who Can Open An RESP?

Whether you're a parent, grandparent, another relative or a friend, you can open an RESP on behalf of a child and contribute a lifetime maximum of $50,000 per child. A child may have more than one RESP, however, the $50,000 lifetime maximum includes contributions from all RESP sources.

Extra Money

In addition, the federal government's Canada Education Savings Grant (CESG) will match your annual RESP contributions by 20%, 30%, or 40% depending on your family income. This adds up to additional contributions ranging from $500 to $600 per year for each child, to a maximum of $7,200 over the life of the plan. The CESG also earns investment income, which grows tax-free while inside the RESP.

You may also be eligible for other government grants. Find out.

When the group plan matures, and your child becomes a qualified student, the plan is paid out to your child as Education Assistance Payments (EAPs). EAPs include any government grants and investment income earned on the grants, plus investment income earned on your contributions.

Universal Child Care Benefit

With the Universal Child Care Benefit (UCCB), it's even easier and more affordable to start planning for your child's post-secondary education. The UCCB provides parents with $100 per month for each child under the age of 6, regardless of your income level. That's an extra $1,200 a year to help cover any current childcare needs, or to save for your child’s future education needs. You can use part or all of your UCCB for your child’s RESP you decide how much. The UCCB can also help you to maximize the Canada Education Savings Grant (CESG).