What you need to know to maximize your RESP grants

Each year, governments offer up to $750¹ per child in education savings grants, and even more for eligible families. Over the years, this financial assistance can add up to as much as $12,800.² But between busy schedules and countless other priorities, it’s easy to let that money slip through your fingers. Here’s what you need to know to get every dollar you’re entitled to.

More than 60% of eligible families³ miss out on valuable government grants every year, often without even realizing it. The good news: you can claim the amount your child is entitled to, without jumping through any financial hoops.

In this article, you’ll find an overview of the basic rules, practical tips for adjusting your habits, and common mistakes to avoid so you don’t leave money on the table year after year.

On an annual basis, governments pay at least 30% of the contributions made between January 1 and December 31 into your child’s Registered Education Savings Plan (RESP). For contributions totalling $2,500, this amounts to up to $500 for the Canada Education Savings Grant (CESG) and $250 for the Quebec Education Savings Incentive (QESI). Additional amounts are also available for eligible families.

After December 31, any grant amounts that could have been received for that period become unused entitlements. However, all is not lost! You can still reclaim them later by implementing a sound catch-up strategy. But please note: You have until the end of the year in which your beneficiary turns 17 to receive your grants, and you must meet certain requirements before they turn 15 to maintain this eligibility.

What RESP grants are available?

In summary, three government grants can be added to your RESP contributions to boost your child’s education savings.

Federal grants

• Canada Education Savings Grant (CESG): Ottawa contributes 20% of the first $2,500 contributed each year, up to a maximum of $500 per year, for a lifetime maximum of $7,200 per child. An additional 10 to 20% is added to the first $500 contributed by eligible families. To learn more about the CESG, check out our article.
• Canada Learning Bond (CLB): This assistance is available to low-income families, with no contribution required. It provides $500 for the first year of eligibility, then $100 for each subsequent year until the child turns 15, up to a maximum of $2,000. To learn more about the CLB, check out our article.

Provincial grant in Quebec

• The Quebec Education Savings Incentive (QESI): This grant tops up your contributions by 10% on the first $2,500 contributed, up to a maximum of $250 per year. The additional QESI adds another 5% to 10% on the first $500 for eligible families. In total, these amounts can reach $3,600 per beneficiary. To learn more about the QESI, check out our article.

Depending on your financial situation, your child’s age, and your savings goals, different contribution strategies can help you maximize the full $10,800 available per child through the CESG and the QESI.

1. Contribute $2,500 per year for 14 years

If your child is 3 years old or younger and your goal is to receive your grants as quickly as possible, you’ll need to set aside $208 per month to maximize your annual grants. At this rate, it will take 14 years and a few months to receive all the grants your child is entitled to.

2. Reach $36,000 before your child turns 18

You could also aim for the lifetime limit of $36,000 in eligible contributions and reach that limit gradually over the life of your investment. For example, if you open an RESP as soon as your child is born, you could contribute about $167 per month for 18 years to receive all your grants.

3. Recover your unused grants

If you opened your child’s RESP late, or if you haven’t always reached the annual contribution limit of $2,500, the catch-up provision allows you to contribute up to $5,000 per year to recoup your grant entitlements for those years.

For example, you can still maximize the benefits for a 9-year-old child. That would mean investing $4,500 per year—the equivalent of $375 a month—for eight years to reach that goal. It certainly requires a greater financial commitment, but it’s worth it.

Sometimes, making the most of RESP grants starts with a few simple—and, above all, consistent—saving habits:

• Start early. The earlier you start contributing, the longer your money will benefit from the combined leverage of the grants and your contributions. Even small amounts can make a real difference over the years.
• Set up automatic contributions. Preauthorized monthly payments will fit seamlessly into the family budget. Once that’s done, you won’t have to think about it anymore! You can simply set up your monthly payment and then adjust it as needed from the Kaleido Client Space.
• Take advantage of an unexpected windfall. Did you receive a tax refund or a surprise year-end bonus? Take this opportunity to invest it in your RESP! With just a few clicks in your Client Space, you can make the most of the current year or even recover unused grants from previous years.
• Give the gift of an RESP. As we all know, kids can get a lot of gifts! Birthdays or holidays are great opportunities to invite grandparents, godparents, and other family members to contribute to your children’s education savings.
• Get your teen involved in saving. If they receive money from a job or as a gift, you could encourage them to contribute to their RESP. Not only would you be teaching them good saving habits and financial responsibility, but you would also be actively involving them in planning for their future.
• Review your strategy before the end of the year. This good habit will help you assess whether you’re still on track and confirm your savings goals. This will also be a good opportunity to set up or adjust your monthly payments so you can finish the year on a high note and start the next one off on the right foot.

Need help figuring out how much your monthly contributions should be? Check out our article on planning your family finances effectively.

In the busy lives of families, certain details can sometimes go unnoticed, which may limit the benefits your family is entitled to. Here are the most common pitfalls to watch out for when saving for education.

1. Saving for education without opening an RESP. Only RESP account holders can receive the grants. No other savings vehicle—whether a TFSA or an RRSP—qualifies for them. That’s what makes it by far the best option for financing your child’s education.
2. Waiting too long before getting started. Not only do you risk losing access to all your grants, but this will also put more strain on the family budget. Remember that the sooner you start, the more time your savings will have to grow.
3. Thinking that you can receive grants without making any contributions. Only the CLB does not require a contribution in order to be automatically deposited into an RESP. Keep in mind that CESG and QESI payments are based on your contributions, so you have to make contributions in order to receive the available RESP grants. Good news: Kaleido handles the applications for you!
4. Ignoring the grant eligibility rules. Between the December 31 deadline and eligibility for grants through the end of your teen’s 17th year, there are certain conditions you must meet before your teen turns 15 in order to maintain your eligibility. Ignoring them can be costly! Want to know where you stand? Our fun tool will help you determine whether you’re still eligible for grants.
5. Believing myths about RESPs. No, you won’t lose your investment if your child doesn’t continue their education, and no, the RESP isn’t just for paying for university: there are thousands of eligible vocational, college, and university programs.

In summary, no matter where you are on your financial journey, opening an RESP is still the first step—and by far the most rewarding—in preparing for your child’s future!

Developing good saving habits—and starting early—makes all the difference: it can reduce mental stress, spread the financial burden out over time, and allow an RESP to benefit longer from the combined growth of contributions and grants. And when it comes to your children’s dreams, these good habits can help give them the resources they need to achieve their ambitions.

Fortunately, Kaleido’s education savings advisors are here to help you develop a personalized strategy that fits your budget while aiming to maximize the grants your children are eligible for year after year. Contact your Kaleido representative to review your strategy or take the first step and open your RESP online right now!