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Investment

Financial assistance for students from low-income families

November 2, 2020

Want to save for your child’s education with a Registered Education Savings Plan (RESP)? And wondering how you can do that on a modest income? The Canada Learning Bond (CLB) allows you to put up to $2,000 aside for your children’s postsecondary education. Follow the guide.

Angela Iermieri, a financial planner at Desjardins, gives an overview of this federal educational grant program.

Who is eligible for the Canada Learning Bond?

If your family net income is lower than the threshold determined by the government, your child can receive the CLB if they:

  • Were born on or after January 1, 2004
  • Have a valid Social Insurance Number (SIN)
  • Are a resident of Canada
  • Are named in an RESP

How does it work?

If your child is eligible for the CLB, the Government of Canada will contribute up to $2,000 to their RESP.

The payments will be made as follows:

  • $500 for the first year they’re eligible and an additional $25 to cover the fees to open the RESP account
  • $100 for each additional year of eligibility, up to age 15

The good news is that you don’t have to contribute to your child’s RESP to apply for the CLB. If your child is eligible, the government will pay the allotted amount in their RESP.

If your child is not eligible when you open their RESP but becomes eligible later on, they will be able to receive the CLB.

This grant has no impact on other benefits you receive from the Government of Canada.

What is an RESP?

It’s a plan that allows you to:

  • Put money aside for your child’s post-secondary education
  • Grow money tax-free
  • Get generous government grants:
    • Canada Education Savings Grant (CESG) of up to $7,200
    • Quebec Education Savings Incentive (QESI) of up to $3,600
    • Canada Learning Bond (CLB), which, as we’ve seen, can be as much as $2,000

The funds from an RESP can be used to cover your child’s expenses in a full- or part-time program offered by a postsecondary educational institution like a cégep, college, trade school or university.

If your child doesn’t pursue a postsecondary education, they will not be able to use these grants. The CLB will have to be paid back to the Canadian government, while the CESG and QESI could be transferred to a sibling. If not, these grants will also have to be repaid.

To make things more concrete, you can use the RESP calculator to quickly find out how much you could save for your children’s education based on the amount invested and the grants received.