Registered Education Savings Plan, Canada Education Savings Grant and Canada Learning Bond

An RESP is a special type of savings account that can help you save for your child’s education after high school. The links below will give you more information on the different types of RESPs and where you can get one.

No matter what your family’s net income is, if your child has an RESP they are eligible to receive the Canada Education Savings Grant. Take a look at the links below to find out more about the program and how much money you may be able to receive. If your family’s net income is $38,832 or less, you are probably eligible to collect the Canada Learning Bond. Use the additional resources below for more information on these programs.


Tools

A list of RESP providers in Canada can be found here: http://www.hrsdc.gc.ca/eng/learning/education_savings/publicsection/new_promoter_list.shtml

Build the costs of your child’s education into your long-term financial plan using this RESP Calculator


Additional Resources

Government of Canada brochure on RESPs: www.canlearn.ca/eng/saving/RESP/brochure/resp.pdf

Human Resources Canada FAQ on RESPs:
http://www.canlearn.ca/eng/saving/resp/faq.shtml

Government of Canada brochure on the Canada Education Savings Grant: http://www.canlearn.ca/eng/saving/CESG/brochure/cesg.pdf

Government of Canada brochure on the Canada Learning Bond: http://www.canlearn.ca/eng/saving/CLB/brochure/clb.pdf


FAQ

What if I don’t make enough money to contribute to an RESP for my child?

Keep in mind that every little bit counts, even if you don’t feel that you have the money to start saving for your child’s education right now. Any small amount can make a difference, so try saving your loose change in a jar. Every month, take what you’ve collected to the bank and deposit it in your child’s RESP account. If you usually grab a coffee in the morning before work, try putting that money in a jar for your child’s RESP instead! You don’t have to put in a lot of money all at once; you can use the power of interest to build your money over time.

In fact, starting early means you’ll have less to pay overall than if you just pay for your child’s education 18 years from now. This is true because of the power of compound interest and time. Consider this example: You open an RESP that makes 8% a year in interest, and all the interest stays in the RESP (as it usually does). Between what you contribute and what the government adds, let’s say a total of $1000 per year is put into the RESP for your child. If you contribute in this way for ten years, after ten years you have $14,487, because of compound interest. That’s $4487 in interest, which is money you did not have to work for. So now, your child is ten. If you continue contributing until your child is 18, you will have $37,451 in the account.

Suppose you don’t put any more money into the RESP after your child turns ten, its value will grow to $26,814 by age 18. To put it all together, you and the government contributed $10,000 in total to your child’s RESP, and when your child goes off to college the RESP is worth $26,814. Interest accounts for more than half of that money, a total of $16,814. Note that if you only started putting away money when your child turned eight, you would only have $14,487 when your child was 18 (after 10 years of saving). Putting away the money 8 years early means an extra $12,327 for your child’s education that you did not have to work for to put away.

Can I set up an RESP even if I don’t have a bank account?

You don’t need to have a bank account in order to set up an RESP for your baby, but this can be a great chance to get one! When you visit your local bank or credit union to set up your child’s RESP, ask about setting up a chequing or savings account for yourself. It’s also a good idea to think of opening a bank account for your baby. You would have to open it in trust, so that you could take care of it while your baby grows up. If you can get a chequing account that has no fees, you might as well have one, and you might as well open one for your child as well.

What if I don’t think my child will continue their education after high school?

While you might not be sure that your child will continue their education after high school, you want to make sure that you leave options open. The great thing about RESPs is that they can be used for a number of different programs after high school. Often, RESPs can be used for university, college, trade school, or lots of other programs. Just make sure you ask your RESP provider what types of education the RESP can be used for, and what happens if your child doesn’t go to any type of school, before you sign anything. ^xiv