The RESP Pays Off for Everyone
November 22, 2019
While many people know that the government adds grants to RESP savings for post-secondary education, the popular misconception remains that the registered education savings plan (RESP) is for the wealthy. Nothing could be further from the truth! It doesn’t take much to open an RESP and benefit from the government grants; even small amounts add up and make a difference over time. In fact, if your family is financially eligible to the Canada Learning Bond (CLB), you could even open an RESP with Kaleido at no cost to receive this grant without ever having to invest a single penny from your own pocket. So let’s put some spotlight on the grants available to help all families planning for post-secondary education.
Additional grants for low-income families
Several supplementary measures are in place to support lower-income families. The Canada Education Savings Grant (CESG) and the Quebec Education Savings Incentive (QESI) each have an “additional” component, making grants more accessible to families of modest means. Then there’s the Canada Learning Bond (CLB), specifically intended to support lower-income families with up to $2,000 in extra funding per child. Parents don’t even have to make RESP contributions to receive this grant; opening an RESP is all it takes to get the CLB.
Case scenario of grant calculations
Let’s use a case scenario for a clearer picture. Alexa’s parents earn $41,0001 per year and have been contributing $11.25 monthly in an RESP since their daughter was born. At this pace, they will accumulate in $2,295 in contributions for Alexa’s education. If their financial situation remains the same, their investment will attract $918 in CESG and $459 in QESI. Also, since Alexa is born after December 31, 2003, she’s eligible for the CLB, which means an additional $2,000 in grant money. That’s a total of $5,672 available to help pay for Alexa’s post-secondary education, and the earnings on this amount aren’t even included, making the RESP very interesting for Alexa’s family!
The Importance of Raising Awareness
Although the RESP is gaining in popularity with families, more work needs to be done to raise awareness among less privileged communities. Perhaps this is because we continue to wrongly believe the RESP a financial product reserved for families of means, when in truth, it exists to give children of all backgrounds the means to pursue the education of their choice and build a bright future!
1. The net adjusted family income amounts used to determine grant entitlements are calculated yearly by both levels of governments. Talk to one of our scholarship plan representatives to learn how much you could receive in grant money based on your situation.