The rising costs of education make such plans as the Registered Education Savings Plans (RESP), in combination with the Canada Education Savings Grant (CESG), and their tax advantaged nature a must for most parents to consider for their children.

Funds accumulated in an RESP will grow tax-free and can be used to finance any post-secondary education the student wishes to engage in. This includes the costs of tuition, books and supplies, room and board, travel, etc. – anything that is education related – whether it be at a community college, trade school or university.

Following are some terms that you should be familiar with when investing in your children’s education using an RESP:

The subscriber: The subscriber is the person who opens the RESP. The subscriber may be a parent, grandparent or other relative or friend.

The beneficiary: The beneficiary is or are the children named in the plan who will benefit from the accumulated funds in the RESP after completing high school in the form of Education Assistance Payments.

Education Assistance Payments (EAP): The payments made to the child, who having finished high school, uses the funds to continue his or her education.

Three types of RESPs

  1. Family plans: You can name one or more children as beneficiaries of the RESP but they must all be related to you. They may be your children, adopted children, grandchildren or nieces or nephews. With the family plan, you will want all or any one of the children named in the plan to receive benefits and you will also want to decide, either on your own or with the assistance of a financial advisor how the money is to be invested.
  2. Individual plans: The individual plan benefits one beneficiary who may or may not be related to you.
  3. Group plans: You may be able to participate in a group plan through your employer in which you name your own beneficiary(ies).


Qualifying educational programs

A qualifying educational program is any course of study that lasts at least 3 consecutive weeks with at least 10 hours of instruction or work each week. A program offered by a foreign educational institution must last at least 13 weeks.

Qualifying educational programs include apprenticeships, programs offered by trade schools, CEGEP (in Quebec), colleges or universities.

RESP funds can be used for full or part-time study in a qualifying program.

Maximum contribution per beneficiary

The maximum contribution that may be made to an RESP for each beneficiary is $50,000. This limit will include all RESPs opened for each of the beneficiaries.

What happens if the beneficiary does not continue education after high-school?

  • You might wait a period of time to see if the beneficiary later decides to enroll in a qualifying program.
  • You might use the funds accumulated for a sibling who does continue his/her education after high school.
  • You might transfer the funds accumulated in the RESP to help grow your own retirement funds. This will not include either the Canada Learning Bond (CLB) or the Canada Education Savings Grant (CESG), both of which must be returned to the government.
  • You could withdraw your personal contributions, tax-free.