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Setting up an RESP

The best way to set up RESPs for your children is to make an appointment with a representative. The representative will generally come to your home and explain everything in detail and answer your questions. They may also bring along some plan options so you can see how much you can save for your child's education based on various affordable contribution amounts.

You and your partner decide how much you would like to contribute, and if you would like to do it on a monthly, annual or one-time basis. The child in your plan (the "Beneficiary") can be up to 15 years old at the time of enrollment.

You set up a pre-authorized payment plan, and your regular contributions are made from your bank account. You generally have an option on when your savings are withdrawn, the 1st, 15th or 21st of the month. Contributions continue until your child turns 18. Of course, you can make changes to your plan at any time.

Here's an example: if you start saving just $100 a month when your child is born, by the time your child is ready for college or university, we estimate you will have just over $50,000 available for his or her education! This is made up of your contributions, interest earned, Government grant contributions (CESG) as well as interest on the grant.

What if you don't start an RESP right away?

For every year you wait, you will have about $5,000.00 less for your child's education (based on the above $100/month example). However, some plans allow you to make up for lost time by increasing your contribution amount, or even making lump-sum payments for previous years! How does your child receive a scholarship through an RESP? After the RESP reaches the maturity date (usually when the beneficiary or child reaches 18), the funds that have accumulated in the account get paid out. In Canada this takes place by way of scholarships, officially called Education Assistance Payments (EAP's).

What about bursaries?
In addition to scholarships, Canadian university scholarships and bursaries can be applied for at individual educational institutions. Bursaries are not part of an RESP plan, but can be used to reduce your overall costs. An RESP accumulates money that will be used for post-secondary education, but RESP providers generally do not provide for Canadian scholarship bursaries or Canadian education bursaries, or grant post-graduate funding bursaries.

Is there an RESP contribution cap?
Yes. You may not contribute more than a total of $50,000 per child, and the Government will contribute a maximum of $7,200 in Canada Education Savings Grant (CESG) per child, to a maximum of $500 per year.

Are there any special or extraordinary expenses (for example private education) which are not allowed to be used for an RESP?
No, the only requirement to start receiving Education Assistance Payments or scholarships from your RESP is for your child to be enrolled in a recognized post-secondary institution. RESP eligible schools may include private schools, trade schools, religious colleges, military schools, colleges and universities.
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