A Registered Education Savings Plan (RESP) is a special savings account for parents who want to save for their child’s education after high school. t is a special savings account registered with the Government of Canada to help you, your family or friends saving early your child’s education after high school.
The money in the RESP will be invested so it can grow and earn interest.
Rising Cost of Post-Secondary Education
More than ever, the demand for a post-secondary education can be felt in Canadian and international job markets. Canada maintains its position as the world’s most educated country with 51% of the population having attained a post-secondary qualification.
The cost of a post-secondary education for a child born in 2013 could rise to more than $140,000. Some reports even indicate that the cost of education is increasing at three times the rate of inflation!
Government Grant money available with RESPs
When you open a Registered Education Savings Plan (RESP), your child becomes eligible for government grants that will be added to your contributions and grow in your plan. The Government grant you receive into Child’s RESP can be from 20% from 40% depending on family income, and grow on a tax-deferred basis until they are withdrawn to fund post-secondary studies.
- Basic Canada Education Savings Grant
The Canada Education Savings Grant (CESG) is money that the Government adds to a Registered Education Savings Plan (RESP). This money helps to pay the costs of a child’s full- or part-time studies after high school at.
- apprenticeship programs
- CEGEPs (general or vocational college in Quebec)
- trade schools
- colleges
- universities
The lifetime maximum amount of CESG a child can get is $7,200.
- Canada Learning Bond (CLB)
The Canada Learning Bond (CLB) is money that the Government adds to a Registered Education Savings Plan (RESP) for children from low-income families. This money helps to pay the costs of a child’s full- or part-time studies after high school at. No personal contributions to an RESP are required to receive the CLB
- apprenticeship programs
- CEGEPs
- trade schools
- colleges
- universities
How much a child could get
The Government of Canada contributes up to $2,000 to an RESP for an eligible child. This includes:
- $500 for the first year of eligibility
- $100 each year the child continues to be eligible (up to and including the benefit year in which they turn 15)
- Additional Canada Education Savings Grant
Depending on your net family income, you could receive an extra 10% or 20% on every dollar of the first $500 you save in your child’s RESP each year.