Students these days need all the financial help they can get.
The cost of education in Canada keeps rising, with average undergraduate tuition rising to $7,076 for 2023 to 2024, up 3.0% from the year before. The average graduate school bill is up 2.2% to $7,573.
A registered education savings plan (RESP) can make it easier.
An RESPs amazing tax benefits, combined with free money from the government, mean even people with modest incomes can make a solid financial contribution to their kids' educations.
You can open an RESP as soon as your child has a Social Insurance Number (SIN). The sooner you start, the more time your contributions have to grow through your chosen investments.
Get started with Canada's top robo advisor for RESPs: JustwealthWhat is an RESP?
An RESP is a tax-advantaged investment plan designed to help save for post-secondary education, including college, university, trade schools, and apprenticeships. It offers government grants like the CESG, which matches 20% of contributions up to a limit, plus tax-free growth, making it a powerful tool to fund your child's education.
RESP rules: What you need to know
Some quick stats and facts to help you understand the RESP quickly
- Lifetime contribution limit: $50,000 | You can contribute as much as you want each year, but the total for each child can’t go over $50,000 (you can earn beyond this amount when you invest)
- No annual contribution limit | There's no set amount you have to contribute each year, but sticking to $2,500 annually helps maximize government grants.
- Government grants available | The Canada Education Savings Grant (CESG) adds 20% to your contributions, up to $500 per year per child.
- Extra grants for lower-income families | Families with lower incomes may qualify for an extra 10-20% in CESG and the Canada Learning Bond (CLB), which provides up to $2,000 without needing contributions.
- Tax-free growth | Money inside an RESP grows tax-free until it’s withdrawn for education expenses.
- Withdrawals are taxed for students | When money is withdrawn, only the investment earnings and grants are taxed, and since most students have little to no income, they usually pay little or no tax.
- First-year withdrawal limits | In the first 13 weeks of school, students can withdraw up to $5,000 (full-time) or $2,500 (part-time); after that, there’s no limit.
- RESP must be used within 36 years | RESPs can stay open for up to 36 years, giving plenty of time if plans change.
- Transferring to a sibling | If one child doesn’t use their RESP, the funds can be transferred to a sibling’s RESP tax-free.
- Rolling over to an RRSP | If the RESP isn’t used, up to $50,000 of investment earnings can be moved into your RRSP, as long as you have contribution room.
- Over-contribution penalty | If you contribute more than $50,000, you’ll pay a 1% penalty per month on the extra amount until it’s removed. This doesn't mean it can't grow beyond $50,000.
- No tax deduction for contributions | Unlike RRSPs, you can’t deduct RESP contributions from your taxable income.
Key terms to know
| Term | Definition |
|---|---|
| Subscriber | The person who opens and contributes to the RESP. |
| Contributions | Money deposited into the RESP by the subscriber. |
| Beneficiary | The person who will receive the RESP funds for education. |
| Educational Assistance Payments (EAP) | The investment earnings and grants paid to the beneficiary for education expenses. |
| Promoter | The financial institution managing the RESP and making payments to the beneficiary. |
How does an RESP work?
3 types of RESP accounts
RESPs come in three types: individual, family, and group plans. The plan you choose affects how you contribute, invest, and withdraw funds for education. If you have more than one child, a family plan is likely your best bet.
An individual plan has only one beneficiary, making it a good choice for an only child, a niece or nephew, or even an adult saving for their own education. Since the funds are for a single person, you can tailor the investments to their specific education timeline.
Individual RESPs have a key limitation
If a grandparent (or anyone other than a parent) opens an individual RESP for a child, the parent cannot open another RESP for that same child without careful coordination. While multiple individual RESPs can exist, they all share the $50,000 lifetime contribution limit, and tracking contributions across different plans can be tricky.
This can also create issues with government grants like the Canada Education Savings Grant (CESG) since they’re distributed per child, not per plan. If different people contribute to separate RESPs without coordination, they may accidentally miss out on matching grants or exceed limits, triggering tax penalties.
Best practice
If multiple family members want to contribute, it’s often better for parents to open the RESP and have grandparents or others contribute to the same account rather than opening separate individual plans. This avoids complications and ensures government grants are maximized.
A family RESP is ideal if you have, or plan to have, more than one child.
It allows you to name multiple beneficiaries under a single plan, giving you more flexibility in how you save and use the funds. Bonus: Your money grows faster thanks to compounding interest on a larger amount of contributions.
Who can be included in a family RESP?
To open a family RESP, all beneficiaries must be related to you by blood or adoption and must be under 21 years old when they are added to the plan. This includes:
✔️ Your children (biological or adopted)
✔️ Stepchildren
✔️ Grandchildren (including adopted grandchildren)
✔️ Siblings
Important: Nieces, nephews, aunts, uncles, and cousins cannot be named as beneficiaries under a family RESP.
Why choose a family RESP?
- Flexibility in fund sharing – If one child doesn’t pursue post-secondary education, the other children in the plan can use their share of the RESP funds.
- Shared government grants – The Canada Education Savings Grant (CESG) can be used by any eligible child in the plan, up to the $7,200 maximum per child. Provincial grants, like the BC Training and Education Savings Grant (BCTESG) and the Québec Education Savings Incentive (QESI), can also be shared among beneficiaries.
- One account, less hassle – Instead of juggling multiple RESP accounts, a family plan lets you manage all your kids’ education savings in one place.
How contributions work in a family plan
- There is no minimum deposit required.
- You can contribute up to $50,000 per child in lifetime contributions.
- If your RESP is with a financial institution, you choose how to invest the funds.
- If your RESP is with a scholarship plan dealer, the money is managed for you. Or use a robo advisor, like Justwealth, and the money is invested based on your risk tolerance.
How withdrawals work
- You decide how to divide the funds among beneficiaries based on their needs.
- If one child doesn’t go to school, their share can be reallocated to other children in the plan.
- Investment growth and government grants remain tax-free until withdrawn for education expenses.
A family RESP helps maximize savings, government grants, and tax-free growth—all while ensuring your contributions benefit your children as they head off to school. We think it's the best RESP.
Group RESPs, also called group scholarship trusts, pool money with other families and are managed by a plan provider.
The payout depends on how many students of the same age attend post-secondary education that year. They also tend to have higher fees and tighter rules, including minimum deposits, how often your child can use EAPs, and which programs are eligible.
While these plans may seem appealing, they come with strict rules on contributions and withdrawals. Missing a payment or withdrawing early can lead to penalties, and your child may receive less money than expected.
Before choosing an RESP, consider how many children you’re saving for and how much flexibility you want. Family and individual plans offer more control, while group plans come with more restrictions and potential downsides.
Where can I open an RESP account?
You can get an RRSP from banks, credit unions, trust and investment companies and other select organizations that specialize in RESPs. The government of Canada has a website that enumerates a list of RESP providers (known as “promoters”).
Money.ca's picks for RESP providers
| Justwealth | Wealthsimple | TD Easy Trade |
|---|---|---|
|
|
|
|
◦ Expert-managed RESP portfolios – Ideal for hands-off investors
◦ Dedicated education target date funds – Automatically adjusts risk as school approaches ◦ Low fees, high customization – More control over investment choices |
◦ Easy-to-use automated investing – Great for beginners
◦ No account minimums – Start saving with any amount ◦ Socially responsible investing options – Aligns with ethical values |
◦ $0 commissions on ETFs – Invest affordably in diversified funds
◦ Simple mobile-friendly platform – Manage your RESP anywhere ◦ Backed by TD’s banking network – Easy to link accounts |
| Justwealth review | Wealthsimple review | TD Easy Trade review |
| Visit Justwealth | Visit Wealthsimple | Visit TD Easy Trade |
A Registered Education Savings Plan (RESP) is only as good as how you use it. To get the most out of government grants and tax-free growth, here’s how to optimize your contributions and investment strategy.
1. Start early — as soon as your child has their social insurance number
The sooner you contribute, the more time your money has to grow. Compound interest works best over long periods, so don’t wait to open an RESP.
2. Maximize government grants (CESG)
- The Canada Education Savings Grant (CESG) matches 20% of contributions, up to $500 per year per child.
- To get the full $7,200 CESG, contribute at least $2,500 per year starting early.
- If you can’t contribute $2,500 every year, you can carry forward unused CESG amounts, but only up to $1,000 per year.
3. Consider an upfront lump sum contribution
If you wait until your child is older to start contributing, you may not have enough time to maximize the CESG.
- A lump sum deposit early on (e.g., $16,500 when the child is young) gives more time for growth and allows you to hit the $2,500 annual CESG-eligible contribution while still spreading payments out over future years.
- Even $5,000 to $10,000 upfront can give investments a big head start.
4. Adjust if your child starts university early
- If your child is a genius and starts university at 17, you might run out of time to max the CESG.
- To prepare, consider front-loading contributions in the early years so you can hit the CESG max sooner.
5. Invest for growth
- RESPs can hold stocks, ETFs, mutual funds, and GICs.
- Early on, take more risk (stocks, ETFs) for higher growth.
- As your child nears university, shift to safer investments (bonds, GICs) to preserve capital.
Related reads: How to buy stocks and Best ETFs in Canada
RESP warnings: What to watch out for
Not all RESPs are created equal. While major banks and robo-advisors offer flexible, low-fee options, some group RESP providers have a long history of high fees, withdrawal restrictions, and regulatory issues.
Two names that have drawn serious complaints and regulatory scrutiny are Global RESP and Embark RESP.
Global RESP: A history of compliance issues
Regulatory violations – In 2020, the Ontario Securities Commission (OSC) permanently banned Global RESP’s founder, Issam El-Bouji, for failing to comply with securities laws.
Denial of funds – Many account holders reported difficulty accessing their money, even when their child was enrolled in a qualifying school.
Hidden fees & enrollment charges – Some parents were promised reimbursement for upfront fees but struggled to get refunds.
Global RESP is no longer enrolling new subscribers, but existing account holders may still face challenges withdrawing their funds.
Embark RESP: High fees and withdrawal headaches
Fee structure changes – Embark has changed its terms multiple times, sometimes increasing fees and reducing benefits for account holders.
Excessive administration fees – Some users have reported losing thousands of dollars in fees before their child even reaches post-secondary education.
Difficult withdrawals – Many parents have struggled to get their money out, facing long hold times, unclear requirements, and outright rejections.
Repeated name changes – Formerly Heritage Education Funds and Knowledge First Financial, Embark has rebranded multiple times, raising concerns about transparency.
- ❌ Avoid group RESP plans – They often come with high fees, strict rules, and limited flexibility for withdrawals.
- ✔️ Choose banks, credit unions, or robo-advisors – These providers offer greater control, lower fees, and fewer withdrawal restrictions.
- 💡 Read the fine print – If a company requires fixed contributions or enrollment fees, think twice before signing up.
Is an RESP worth it? Absollutely
An RESP is one of the best ways to save for your child's education. With free government grants, tax-free investment growth, and flexible withdrawal options, it's a smart, long-term strategy to ease the financial burden of post-secondary costs.
The key? Start early. The sooner you contribute, the more time your savings have to grow. Even small, consistent contributions can add up to thousands of extra dollars by the time your child heads to school.
Understanding how RESPs work ensures you maximize grants, avoid penalties, and make the most of your investment. Don’t wait—open an RESP today and give your child a strong financial start.
Justwealth is Canada's best RESP providerWith files from Barry Choi and Sandra MacGregor
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Daniel McIntosh is a Toronto-based freelance writer, editor, and content strategist specializing in personal finance, business, and culture. His work has appeared in Money.ca, Yahoo Finance, KOHO Financial, This Magazine, and Maisonneuve, among others.
Tyler Wade has worked in personal finance for over 5 years writing for brands like Ratehub, Forbes, KOHO, and now Money.ca.
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