7 Key Benefits of Starting an RESP for Your Child


Without proper preparation, future students are at risk of accumulating unnecessary debt and financial stress. According to a recent report from Statistics Canada, the average tuition for undergraduate students and full-time graduate students for the 2022/2023 academic year is $6,834 and $7,437, respectively.

Opening a Registered Education Savings Plan (RESP) can help you pay for your child’s post-secondary education and set them up for success. Here are seven benefits of saving in an RESP and how this dynamic savings option can direct your child to a bright and prosperous future.

1Starting an RESP Is Easy

Customer-friendly RESP providers, such as CST Spark, allow you to apply for an RESP online without the usual hassle of traditional in-person transactions, making the enrollment process more manageable and efficient. Additionally, other individuals such as Grandparents, Aunts and Uncles in the family, can set up and fund your child’s RESP. Instead of gift items during special occasions, you can encourage your family and close friends for monetary contributions toward your little one’s RESP.

2Your Savings Grow Tax-Free

One significant advantage of an RESP is that it can grow without incurring taxes while the funds are in the plan. Until the funds are withdrawn, taxes are deferred, enabling the subscriber (the person who opens the plan) and other well-meaning relatives and friends to contribute to your child’s post-secondary education.

When it’s time to get the money, taxes will then be payable, but it will be based on your child’s tax bracket, not yours. Since most students have minimal to zero income, they can secure the funds without paying so much in taxes.

3Government Grants Can Supplement Your Child’s RESP.

Another notable benefit of RESPs is that the federal government matches the money you’ve contributed up to a certain percentage, depending on the grant you’re eligible for.  With the Canada Education Savings Grant (CESG), you can get an additional 20% grant for the first $2,500 in contribution to the RESP, which is $500 per year up to a lifetime limit of $7,200 per child.

Children or beneficiaries from low-income families can receive an additional incentive of up to $2,000 per child if they qualify for the Canada Learning Bond (CLB). Unlike other grants, the CLB does not require personal contributions, significantly aiding low-income families to boost their children’s education savings.

4RESPs Can be Utilized for Various Purposes

One misconception others may have about RESPs is that they can only be used for tuition fees. Your future post-secondary student can utilize their RESP to pay for eligible education-related expenses such as but not limited to transportation, computer, laptop, housing, food, books, or apprenticeship programs.

It is also widely accepted by several educational institutions that offer non-university training programs for different fields, such as dental hygiene, fashion and design, music, film, and early childhood education.

5You Have Multiple Investment Options

An RESP is not limited to savings, as multiple providers offer different investment options. Depending on personal factors such as your risk tolerance, desired growth, investment goals, and financial situation, you can choose from various investment assets such as exchange-traded funds, bonds, company stocks, mutual funds, and guaranteed investment certificates.

6RESP Savings Are Safe and Secured

If your child does not pursue higher education or chooses to defer their education post-high school, your savings are still safe as RESPs can stay open for up to 36 years. If you decide to keep it open, make sure that you check the rules and regulations of your RESP provider to prevent costly mistakes that may affect your child once they resume their post-secondary education.

Alternatively, you can also transfer the savings to your other kids under 21 years of age. You may also be eligible to transfer the funds to your other registered savings plan or completely close the RESP.  Should you decide to close the RESP, you can still get your original contributions sans taxes, but you need to return the government grants and pay for the taxes incurred from the capital gains.

7You Decide the Type of RESP

Another significant benefit of RESPs is you get to decide the type that best suits your needs and preferences. You can either open an individual, family, or group plan, and you have control over the amount and frequency of your contributions.

If you only have one intended beneficiary and want others to contribute to your child’s RESP, starting an individual plan is ideal. As the name implies, a family plan works best for families with multiple beneficiaries. Compared with the individual plan, only individuals related to the beneficiaries can set up and contribute to the RESP.  On the other hand, group RESPs are designed for multiple participants.

With the rising costs of higher education in Canada, it is more important than ever for parents to invest in their child’s post-secondary education as early as possible.


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