By Karen Robock on August 25, 2023 Estimated reading time: 5 minutes
Government grants are one of the biggest reasons why Canadians open registered education savings plans for their kids. Here’s how to make the most of them.
Photo by RDNE Stock project from Pexels
Whether your child eventually goes off to university, enrolls in a college program or is interested in another type of schooling, there’s no way around it: post-secondary education is pricey. In Canada, the average undergraduate tuition fee for the 2022–23 school year was $6,834. Over four years, this can bring your child’s education costs to a whopping $95,000 or more when factoring in living expenses, and by 2041, this price could rise to $114,024.
It’s a big goal, but with a registered education savings plan (RESP), you can slowly save up for the cost of your child’s future tuition fees, books and other schooling expenses over time—and get a little help along the way. Did you know that the Canadian government will match a percentage of your RESP contributions? Plus, there are federal and provincial grants available for lower-income families, and these can really add up. Here’s what you need to know.
What RESP grants are available?
When you contribute to your child’s RESP, the government will match a percentage of your contributions through the Canada Education Savings Grant, up to a lifetime maximum of $7,200—an amount that could make a big difference in bolstering your savings long-term. Plus, your child might be eligible for an additional bond or grant, depending on your household income and where you live. Let’s look at the details.
How to maximize
Canada Education Savings Grant (CESG)
Lifetime maximum of $7,200 per child
Every child receives an additional 20% on the first $2,500 saved per year.
If it’s possible to set aside $2,500 per year (or $208.33 per month), you’ll receive the maximum $500 annual top-up.
Canada Learning Bond (CLB)
Lifetime maximum of $2,000
Children from low-income families (a household income of $50,197 or less, for a family with no more than three kids, for example, is considered low-income)
Kids could receive $500 the first year they’re eligible, then another $100 each year until they turn 15. This grant is retroactive, and kids can still be eligible to receive it up to the day before they turn 21.
British Columbia Training and Education Savings Grant (BCTESG)
Parents/guardians and kids must be B.C. residents; grant applications must be submitted between a child’s sixth and ninth birthdays.
This grant doesn’t require a matching contribution, but parents may need to apply for it or ask if their RESP provider offers it.
Quebec Education Savings Incentive (QESI)
Lifetime maximum of $3,600
Children younger than 18 who are residents of Quebec (as of December 31 of the taxation year)
The QESI grants matches 10% of your annual RESP contribution, to a maximum of $250. Unused grants from previous years can bump this amount up to a maximum of $500 per year.
How to get the maximum RESP government contribution
With the sky-high cost of living these days, it can be difficult to think about putting money aside for your kids’ future education. But, with a few smart strategies, you can start small and stick with it for big savings and maximum government contributions in the long run. Try these tips:
Contribute early and often. The idea of your little one enrolling in college might seem far off, especially if they’re still in diapers, but it’s smart to start saving now. Thanks to the miracle of compound interest, small contributions can really add up over time. And if your little one isn’t so little, experts agree that you should still start contributing and benefit from some compound growth.
Make a savings plan (but be flexible). Once you commit to a monthly savings goal, no matter how large or small, it’s best if you can stick with it—but that doesn’t mean it’s set in stone. Life happens. You could have a job change that increases or decreases your cash flow, or be faced with a major home repair that requires you to temporarily scale back your RESP contributions. Either way, it’s perfectly reasonable to want to adjust your savings targets. It’s a good idea to reassess your goals every few months and plan accordingly.
Plan to maximize grants. To get the maximum CESG amount of $7,200, you’ll need to contribute $2,500 per year for 14 years, and then $1,000 when your child is 15 years old. If you can’t contribute $2,500 in a given year, contribute what you can—every bit helps—and try to catch up in future years.
Ask for help. Not everyone has the time or know-how to manage an individual or family RESP to qualify for the most government grants. Plus, an RESP can hold different types of investments, including GICs, bonds, stocks and more. There’s a lot to consider, and an investment advisor or financial planner can help you determine the best plan to maximize your savings. Embark, a Canadian fintech that specializes in RESPs, even has an investment strategy that automatically adjusts as your child gets older. This “glidepath” approach is just one of the benefits of working with them.
Work with an RESP expert
Maybe you don’t have the time or inclination to figure out how to save and make the most of RESP funds and grant opportunities. We get it. Luckily, you can call in the pros instead. The education savings experts at Embark are leaders in managing RESPs, and they can help to ensure you maximize your savings for your future graduate.
Check out Embark’s special offer, exclusive to MoneySense readers: Start an account using the promo code MONEYSENSE100 and it will contribute $100 to your child’s education when you save $200. Visit Embark* for details.
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Karen Robock is an award-winning journalist who writes about parenting, wellness and travel—and, occasionally, how you might pay for it all. Her work has appeared in Canadian Living, Reader’s Digest and Prevention magazines.