SAVING FOR POST-SECONDARY EDUCATION
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This article was written by Employment and Social Development Canada (ESDC)
Personal savings now represent the single most important source of funding for post-secondary education, and they reduce the need for loans and bursaries later on. Research indicates that children with education savings are more likely to attend and complete post-secondary education and graduate with less debt.
The Government of Canada encourages the use of Registered Education Savings Plans (RESP) to save for a child’s education after high school. This includes full- or part-time studies not only in university, but also in trade school, apprenticeship programs, college and CEGEP. The savings in an RESP grow tax-free until they are withdrawn to help pay for the costs of education after high school.
Money is available to help you save.
An RESP is also the only savings account that attracts education savings incentives, such as:
- the Canada Education Savings Grant, which is money from the Government of Canada to help make RESP savings grow. The Government of Canada may add between 20% and 40% of personal contribution to an RESP, depending on family income and the amount contributed.
The Canada Education Savings Grant is available for an eligible child until the calendar year in which they turn 17, for a maximum lifetime amount of $7,200.
- the Canada Learning Bond, which is money that the Government of Canada adds to an RESP for children from low income families, born in 2004 or later. It provides:
- an initial deposit of $500 in the RESP; and
- an extra $100 for each additional year of eligibility until the child turns 15 years old.
That’s up to $2,000 in an RESP for a child’s post-secondary education. No personal contributions are required for the Canada Learning Bond.
- Provincial education savings incentives may also be available. Contact your province of residence to find out more.
What can the money saved in an RESP be used for?
The money can be used to help pay for expenses related to education after high school, such as tuition, books, tools, computers, transportation and rent.
When should I open an RESP?
It’s never too late to start saving for a child’s post-secondary education, but it’s best to start early so the money can grow over time. An RESP can remain open for 35 years, even if there is a delay in starting post-secondary education, the savings will be there when it’s needed.
Who can open an RESP?
Anyone can open an RESP: parents, guardians, grandparents, other relatives or friends. While the education savings incentives are only available for eligible children, you can also open an RESP for yourself or another adult, such as a spouse or partner. The money saved in the RESP will grow tax-free until it is withdrawn to help pay for the costs of post-secondary education.
Helpful Links
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- For more information about RESPs and the education savings incentives, go to ca/education-savings
- For a complete list of organizations that offer RESPs, go to: ca/list-resp-promoters
- For information on how to get a Social Insurance Number, go to: ca/social-insurance-number