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RESP: Education Savings
Free government money for your child's education. Here's how to get it.
$50,000
Lifetime Limit
$7,200
Max Free Grants
$2,500
Annual for Max Grant
What is an RESP?
A Registered Education Savings Plan (RESP) is a tax-sheltered account designed to save for a child's post-secondary education. The best part? The government gives you free money through grants.
The Canada Education Savings Grant (CESG)
🎁 Free money alert!
The government matches 20% of your contributions, up to $500/year per child (on the first $2,500 contributed).
- • Contribute $2,500/year → Get $500 free from the government
- • Lifetime max CESG: $7,200 per child
- • That's a guaranteed 20% return before any investment growth!
Additional Grants for Lower-Income Families
- ⬥Additional CESG: Extra 10-20% on the first $500 for families with income under ~$53,359
- ⬥Canada Learning Bond (CLB): Up to $2,000 for low-income families — no contributions required!
Key Rules
- ⬥Lifetime limit: $50,000 per child (no annual limit)
- ⬥No tax deduction: Unlike RRSPs, contributions aren't tax-deductible
- ⬥Tax-free growth: Investments grow tax-free inside the RESP
- ⬥Withdrawals: Grants and growth are taxed in the student's hands (usually very low tax)
- ⬥Eligible schools: Universities, colleges, trade schools, and many international programs
What If Your Child Doesn't Go to School?
- ⬥Wait — they have until age 35 to use the RESP
- ⬥Transfer to a sibling's RESP
- ⬥Transfer up to $50,000 of growth to your RRSP (if you have room)
- ⬥Grants must be returned to the government
- ⬥Your original contributions come back to you tax-free
🍁 Canadian Pro Tip
Open an RESP as soon as your child is born and contribute $2,500/year to maximize the CESG. If you invest in a growth ETF, $2,500/year + $500 CESG for 18 years at 7% return = roughly $100,000+ for their education. Start early!