RESP: How to Get the Canadian Government to Pay for Your Kids' Education

Open an RESP for your child and the federal government will add 20% to every dollar you contribute — up to $500 per year, for free. Most families leave this money on the table simply because they didn't know the account existed.

What Is an RESP?

A Registered Education Savings Plan (RESP) is a tax-sheltered account designed specifically to save for a child's post-secondary education. The money grows tax-free inside the account, and the government contributes grants on top of your savings.

When your child uses the funds for school, withdrawals (called Educational Assistance Payments, or EAPs) are taxed in the student's hands — typically at a much lower rate than yours, often zero.

The Canada Education Savings Grant (CESG)

The CESG is the main reason everyone should open an RESP:

20% on the first $2,500 contributed per year = $500 in free grant money annually
Maximum CESG over a child's lifetime: $7,200
The grant accumulates contribution room — if you don't contribute in a given year, you can catch up in future years (up to $1,000 in grants per year when catching up)

Example: You contribute $2,500/year from birth to age 17. The government adds $500/year in CESG. By the time your child enters university at 18, you've contributed $45,000 and received $7,200 in grants — plus 18 years of compounding growth.

Additional CESG for Lower-Income Families

If your family net income is below certain thresholds, you receive an enhanced CESG:

Family net income (2024)	Additional grant	On first
$55,867 or less	+20% (40% total)	$500
$55,867 – $111,733	+10% (30% total)	$500

This means lower-income families can receive up to $600/year in CESG (instead of $500).

Canada Learning Bond (CLB)

Families who receive the Canada Child Benefit (CCB) and meet income criteria may also receive the Canada Learning Bond — government money deposited directly into the RESP with no contribution required from you:

$500 at account opening
$100/year until age 15
Total potential CLB: $2,000

If your family qualifies for the CLB, opening an RESP immediately is one of the highest-return financial moves available to you.

RESP Contribution Rules

Lifetime contribution limit: $50,000 per beneficiary
Annual contribution: No limit — but CESG is only paid on the first $2,500/year
Who can open: Any Canadian resident (parent, grandparent, aunt, family friend)
Beneficiary: Must have a Social Insurance Number (SIN)

Get your child's SIN early — you need it to open the RESP and start earning grants.

How Withdrawals Work

When your child enrolls in a qualifying post-secondary program (university, college, trade school, apprenticeship):

Educational Assistance Payments (EAPs): Grant money + investment gains — taxed in the student's hands
Principal refund: Your original contributions — returned to you tax-free (it was already after-tax money)

Most students have little to no income during their studies, so EAPs are taxed at near-zero rates. This is one of the most tax-efficient ways to transfer wealth to the next generation in Canada.

What If Your Child Doesn't Go to School?

This is the most common hesitation — and the fear is overblown.

Options if your child doesn't pursue post-secondary education:

Transfer to a sibling — the RESP can be reassigned to another child
Keep it open — the account can stay open for 36 years; your child may change their mind
Transfer to your RRSP — up to $50,000 of investment gains can be rolled into your RRSP (if you have room), with grants returned to the government
Withdraw and pay tax — grants are repaid; investment gains are added to your income (plus 20% penalty tax)

In most scenarios, even the worst outcome (full withdrawal with penalty) still leaves you ahead of having never opened the account, because your contributions grew tax-sheltered.

Where to Open an RESP

Wealthsimple — fee-free, easy to set up, automatic contributions
Questrade — good for self-directed investors who want ETF control
Your bank — convenient, but watch for high-MER mutual fund products; ask explicitly for ETF options
Scholarship plan dealers — avoid these; they charge high fees and restrict investments. Stick to bank or self-directed options.

Choose accounts that let you hold low-cost index ETFs like XGRO (80% equity/20% bonds) or XEQT (100% equity for longer time horizons).

Action Plan

Apply for your child's SIN at Service Canada as soon as they're born
Open the RESP immediately — the grant clock starts the year you open it
Set up automatic contributions of $208/month ($2,500/year) — this maximizes the CESG each year
Check CLB eligibility if your family receives CCB payments
Choose a low-cost ETF — XGRO for 10+ year horizons, shift to conservative funds 3–5 years before withdrawals

The government is offering you $7,200 in free money for your child's education. The only question is whether you're going to claim it.

Written by Raunaq Singh, Founder of Maple Syrup Money.

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RESP and the Canada Education Savings Grant: Free Money for Your Child's Future