Saving for your child’s education
Nov 2021 – 15 min read
With the cost of post-secondary education continuing to rise, it’s important to start saving as soon as you can.
Tax-efficient savings options like an RESP can help you save for your child’s education.
Combining government grants with other personal investments and savings can help you cover the costs of college or university.
How to start saving
There are many saving and investment accounts as well as government grants and benefits that can help as you start putting money away for school.
Registered Education Savings Plan (RESP)
Registered with the Canadian government, an RESPOpens a new website in a new window is a tax-advantaged savings account to help you save for your child’s post-secondary education. The money in an RESP is invested tax-free to help maximize the amount available when your child is ready for higher education. Many people choose to set up automatic contributions to grow the money in their RESPOpens in a new window, with the monthly minimum contribution being $25.
Canada Education Savings Grant (CESG)
The CESG is a grant paid directly from the Federal Government into an RESP. Everyone with an RESP is eligible to receive it, regardless of your household income. The CESG pays 20% of annual contributions you make to all eligible RESPs to a maximum of $500 per beneficiary. The lifetime limit is $7,200.
Canada Learning Bond (CLB)
Low-income families may also qualify for the CLBOpens a new website in a new window - Opens in a new window. If you’re eligible, the Government of Canada will contribute up to $2,000 to an RESP.
Tax-free savings account (TFSA)
In addition to savings accounts that are specifically designed for education, you can also use regular tax-free savings accountsOpens a new website in a new window to help pay for college or university.
Provincial education savings incentives
Depending on where you live, you could also qualify for additional financial help. For example, in Saskatchewan and British Columbia, the provincial governmentOpens a new website in a new window - Opens in a new window may also add money to an RESP if you’re eligible – and this is on top of federal grants like the CLB and CESG.
Savings accounts and other investments
Finally, you can always use money from regular savings accountsOpens in a new window and personal investments to help pay for your child’s education.
Saving for post-secondary education doesn’t have to be daunting. By starting early and with the right planning, you can get on track to meet this goal.
Make the most of tax-efficient savings and investments to help your money go further.
Remember that if your savings don’t quite cover the cost, your child may also be able to benefit from the Canada Student Financial Assistance ProgramOpens a new website in a new window - Opens in a new window, which offers repayable loans and non-repayable grants to eligible Canadian students.
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.