How to boost RESP savings with government grants

* This article is sponsored by Embark Student Corp.

Ninety-two percent of parents believe post-secondary education is important for their child, and 81% believe it’s their duty to help pay for it – but a whopping three out of four Canadian families are struggling to save in light of the rising cost of living, revealed a recent survey by Embark Student Corp. The best course of action for any parent? Open a registered education savings plan (RESP). RESPs are a great way for parents to save and grow money tax-free with government incentives such as grants.

Here’s what you need to know about government grants for RESPs:

What government grants might be available to you?

Canada Education Savings Grant (CESG)

Often called the “cornerstone of contribution matching,” the CESG matches 20% of your contributions to a maximum of $500 per year and a lifetime limit of $7,200. It’s paid by the federal government and available to every RESP beneficiary up to age 17 (with some conditions for 16- and 17-year-olds). This grant is all-inclusive (there are no income limits for eligibility) and forgiving (if you don’t maximize your contributions one year, that room can be carried over to the next year until the age of 17). The bottom line: If you contribute $36,000 strategically over the RESP’s lifespan, the Canadian government will contribute $7,200 directly into that account.

In short: Save $2,500 per year, and earn $500 (up to $7,200 lifetime total). Apply through your RESP provider.

Additional CESG

Low- and middle-income families may also qualify for the Additional CESG, which contributes an extra 10% or 20% of the first $500 you contribute per year. This means up to an extra $50 or $100 per year, depending on your household’s adjusted income that year. Note that these contributions can help earn grants faster, but the CESG and Additional CESG are nevertheless capped at $7,200 combined.

In short: Save $2,500 per year and earn $550 to $600 in CESG and Additional CESG contributions (up to $7,200 lifetime total). Apply through your RESP provider.

Canada Learning Bond (CLB)

This grant for low-income families isn’t based on contributions. It’s a lump sum of $500 the first year, plus $100 for each additional year, totalling up to $2,000, if a family qualifies for it. As of 2023, qualifying families with a net income of $50,197 and one to three children will automatically receive the money by simply opening an RESP for a qualify beneficiary. It is important to note that the threshold does change every year and the number of kids a family has will impact the income you must have to qualify. That being said, accessing the CLB is a good reason to start an RESP, even if you can’t contribute just yet.

In short: Low-income families can open an RESP account and receive up to $2,000 - no parental contributions are required. This is applicable to Canadians born in 2004 or after with a SIN who qualify. Apply through your RESP provider.

British Columbia Training and Education Savings Grant (BCTESG)

To encourage parents to start planning for their children’s education early, British Columbia offers a one-time $1,200 grant to families who start an RESP. The grant needs to be applied for when their child is between the ages of six and nine years old. Other than that, there are no major stipulations: There’s no maximum household income and no contributions from the family are required. The grant applies to all B.C. residents, even if they relocate after receiving the grant.

In short: Receive $1,200 if you are a B.C. resident with a SIN who has an RESP when your child is between the ages of six and nine. Apply through your RESP provider.

Quebec Education Savings Incentive (QESI)

Quebec also encourages parents to start saving early with a grant that matches 10% of your annual contributions, up to $250 per year with a $3,600 lifetime total per child. All Canadian residents under 18 years old and living in Quebec are eligible, with no maximum household income required.

In short: Save $2,500 per year, and earn $250 per child (up to $3,600 lifetime total).  Apply through your RESP provider . 

Additional QESI

Similar to the Additional CESG, the QESI offers incentives for low-income families to register for an RESP. The Additional QESI contributes an additional 5% or 10% on the first $500 contributed every year based on income.

In short: Save $2,500 per year and receive $300 to $350 in QESI and Additional QESI contributions (up to a lifetime total of $3,600 for both QESI and Additional QESI).  Apply through your RESP provider.  

How to maximize your RESP through government grants

Statistics Canada reports that all in (tuition, residence, books, food), a four-year university degree can cost up to $96,000! These five steps will help you minimize that whopping figure by maximizing your savings.

1. Open an RESP. The first step is a simple one. Even if you don’t think you can start saving right away, open the RESP to benefit from government grants like the CLB if you qualify.
2. Start saving. Many experts would say to start as soon after your child is born, even if it’s a small contribution. The obvious reason is that you’ll have more time to save, which means more money in your RESP. The more money in your RESP, the higher chance you’ll have of receiving the maximum government grants. Another benefit of time is compound interest – the longer your savings sit, the more they will build over time.
3. Make regular contributions. Even if you start small, setting automatic withdrawals through your RESP provider allows you to set it and forget it. Without intervention, your money will grow, and you’ll be one step closer to receiving grant contributions.
4. Know what you’re eligible for. While some grants are based on income and some are not, you will need to apply for all of them. That’s why it helps to work with an RESP expert like Embark, which will do the work for you.
5. Go for a glide path investment strategy. It helps to know when to be conservative and when to be more aggressive with your investments. A glide path strategy sets a target date goal (i.e., when your child will start their post-secondary education) and invests in more equities early in the fund's lifetime, giving it greater potential to earn. As your target date approaches, the investments become more conservative, so the fund is exposed to less risk and focuses on preservation in the years before your child starts post-secondary school.   

Embark does the work for you

It’s a lot to take in, we know. Regardless of all the other considerations, like government grants and investment strategies, saving for your child’s education can be challenging enough. That’s why it’s key to partner with a trusted RESP provider that has expertise where you don’t. From maximizing grant eligibility to using a glide path investment approach to ensure you get the most from your education savings, Embark will clarify, simplify and optimize your path.