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The RESP Pays Off for Everyone

Written by: Universitas

December 17, 2014

While most people now know of the government grants available for anyone who invests in an RESP for their children’s post-secondary education, many still believe only the more fortunate have the means to contribute to a registered education savings plan (RESP). But they couldn’t be further from the truth. First, because only a small amount of money is necessary to open an RESP and receive grants, but also because different measures have been introduced to support low-income families in their savings.

Additional grants for low-income families

Government grants are more accessible than ever for families with a lower income, thanks to the additional Canada Education Savings Grant (CESG) and Quebec Education Saving Incentive (QESI). With these, children can receive as much grant money even if their parents contribute two times less than what is normally required. What’s more, families of more modest means can benefit from a third grant that was created specifically for them, the Canada Learning Bond (CLB), which can reach up to $2,000 per child. And no contributions are required to receive the CLB: all parents have to do is open an RESP!

How are the grant amounts calculated?

To illustrate the grants you could receive, let’s take Alexa’s parents as an example: even though they only earn $41,000 per year1, they have invested $11.25 per month in an RESP since their daughter was born. They will have saved $2,295 for Alexa’s education by the time their plan reaches maturity if their financial situation remains the same. This amount would attract $918 in CESG and $459 in QESI, and an additional $2,000 in CLB since Alexa was born after January 1, 2004. That’s a total of $5,672 available to help pay for Alexa’s post-secondary education, and the interest generated by these funds is not even included: talk about a profitable investment!

Why raising awareness is important

Now, if even the smallest investment can generate hundreds of dollars, why do we feel RESPs only benefit the rich? It is most probably because people with a higher income and/or level of education tend to be more interested in the vast choice of investment vehicles available to them, and are thus more knowledgeable on the matter. Of course, you have to know the RESP exists and what it does before you can even start considering investing in one!

Here’s proof of this: in 2013, only 32.8% of all children who were eligible for the CLB actually received it, which means that two out of three children could have benefited from this federal grant had their parents been aware it existed. Because come to think of it, there is no other reason why not to take advantage of the CLB.

So many people have yet to hear of this that spreading awareness is the key! Communication campaigns would certainly help us in doing so, but in the absence of such initiative, the best way to reach as many people as possible is to share the information on the Internet: so click here for more information on the government grants available for education savings!


1 The family net income threshold to receive the maximum additional grant amounts is $43,953 for federal grants and $41,495 for provincial grants.

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