RESPs and the grants many families never claim

Of all the things I explain, this is the one that most often gets "why did nobody tell us this?" So here it is, all of it.

What an RESP is

A Registered Education Savings Plan is a registered account for saving toward a child's education after high school. Money inside it grows without being taxed year to year. When the child is enrolled in a qualifying program, the growth and the grants are paid out to the student, and taxed in the student's hands, who usually has little other income.

Your own contributions come back to you tax-free, because you already paid tax on them.

The part that matters: the government adds money

This is what makes an RESP different from simply saving in your own name. When you contribute, the federal government adds a matching grant on top, called the Canada Education Savings Grant. There is a yearly cap on the grant and a lifetime cap per child, and unused grant room carries forward within limits. The current amounts are on the Government of Canada's RESP pages.

Families with lower incomes may receive an additional amount of grant on the first part of each year's contribution.

this is the one families miss

The grant that needs no contribution at all

The Canada Learning Bond is money the government puts into an RESP for children from lower-income families. It requires no contribution from you. You open the plan, apply, and the bond is deposited. Many eligible families never receive it because they were never told it existed, or assumed an RESP was only for people with money to spare. If your family's income is modest, check eligibility before anything else.

How to open one

1. Get a SIN for the child if they do not have one.
2. Choose where to open it. RESPs are offered by banks, credit unions, and investment providers. Ask whether the provider applies for the CESG and the Learning Bond on your behalf; most do, but confirm.
3. Decide between an individual plan (one child) and a family plan (siblings, which allows some flexibility if one child does not use the funds).
4. Decide what the contributions are invested in. As with a TFSA or RRSP, the account is a container; the investments inside are a separate choice, and one where the child's age and the timeline matter.

Two cautions, honestly

• Group or "scholarship" plans sold door to door or at community events have rules, fees and penalties that are very different from a plan at a bank or credit union. Read the full agreement before signing anything, and understand what you lose if you stop contributing.
• Do not skip your own foundation to fund an RESP. An emergency cushion and basic protection for the household come first. A grant is a good reason to contribute; it is not a reason to leave the family exposed.

What happens later

When the child enrols, the plan pays out in two kinds of withdrawals: your contributions, and the grant-plus-growth portion. The provider will handle the paperwork, and the timing can be spread across the years of study. If the child never attends, the guide's questions above explain what comes back and what does not.