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Investing in your children's education in Canada

February 7, 2022

Did you know that there is an investment vehicle specifically designed to pay for your children’s post-secondary education that allows you to take advantage of generous government grants? Here are 4 good reasons to invest in a registered education savings plan (RESP) and save for your children’s education:

Education is costly!

In Quebec, pursuing higher education has a cost, no matter the level: diploma of vocational studies (DVS), diploma of college studies (pre-university or career program) or university degree (at the undergraduate, master’s or doctoral level). Even if your child goes to a public institution, there are tuition fees that increase over time, as well as additional living expenses (housing, food, transportation, etc.) if the child lives away from home.

An accessible education savings plan

All children who are considered to be Canadian residents for tax purposes can be beneficiaries of an RESP, including those who are not Canadian citizens, provided that they have a social insurance number. According to the Immigration and Refugee Protection Act, Canadian residents for tax purposes refer but are not limited to protected persons, persons who have applied to become permanent residents and persons whose applications to remain in Canada have been approved in principle. Registered education savings plan subscribers must also provide their social insurance number. You can open an RESP when the child is born and receive grants until the end of the calendar year during which the child turns 17.

Good to know

An RESP can be opened by adults other than a child’s parents (grandparents, friends, etc.) to help pay for the child’s education, provided that the parents agree.

Invest at your own pace based on your needs

The RESP offered by Desjardins lets you invest at your own pace based on your needs. Contributions can be made weekly, monthly or annually, on an automatic withdrawal or lump-sum basis, and contribution amounts or methods can be changed at any time. You can invest up to CAN$50,000 per child over the life of the plan. At Desjardins, there is no minimum contribution. As with any registered plan, the return will depend on the type of savings products you invest in (for example, investment funds or guaranteed products). Your advisor can help guide you when creating your investor profile.

Grants that boost your investment

The grants that you receive are based on your RESP contributions and net family income. In Quebec, an RESP beneficiary will receive grants that match your contributions by at least 30%1 in the following manner:

Canada Education Savings Grant

  • Up to $600 per year, with a lifetime maximum of $7,200 per child
  • Is paid out automatically every time you contribute
  • Rate varies between 20% and 40% based on your net family income

Québec Education Savings Incentive

  • Up to $300 per year, with a lifetime maximum of $3,600 per child
  • Is paid out automatically once a year
  • Rate varies between 10% and 20% based on your net family income

Good to know

Low-income families2 can also receive a Canada Learning Bond (CLB) without contributing to an RESP themselves. The CLB provides families with an initial $500, followed by $100 every year the child is eligible, up to a maximum of $2,000.

A registered education savings plan that can be transferred

If your child decides not to pursue post-secondary studies, you can name a replacement beneficiary. If the replacement beneficiary is the child’s sibling, the grants can be kept.3 If there is no replacement beneficiary, the government grants must be paid back, and the accumulated investment earnings will be subject to income tax (unless they are transferred to your RRSP).

1. Depending on the beneficiary’s parents’ net family income, the first $500 can be matched by up to 60%. Some conditions apply.

2. Low income depends on net family income and number of children.

3. Certain conditions may apply.