RESPs Explained: A Guide to Funding Your Child’s Education

Key takeaways:

  • Registered Education Savings Plans (RESPs) can help you save for your children or grandchildren’s post-secondary education, covering tuition, residence fees, supplies, and more.
  • RESP contributions are tax-sheltered. Investment earnings and grant money are taxable to the beneficiary when withdrawn.
  • Investing in private alternative investments may be a smart strategy to manage volatility and promote stable growth of your RESP funds.

A great education can set the stage for post-secondary success, but the investment for families is significant. The government estimates that Canadian citizens and permanent residents can expect to pay up to $11,400 per year in tuition alone or just under $46,000 in total for a four-year education. That’s why it is essential to begin saving as early as possible.

Investing in a Registered Education Savings Plan (RESP) remains a popular way for parents, grandparents, and anyone with a child in their life, to accumulate post-secondary education savings for them. RESPs can be opened by any adult with a Social Insurance Number (SIN) and can assist in payment for university, college, trade schools, and apprenticeships, covering post-secondary institutions both in Canada and abroad. RESPs can cover tuition as well as residence or renting fees and meal plans, supplies and technology, transportation to the school, and student athletic or activity fees. By devising a conscientious strategy for RESP investment and taxation—and by opening and contributing to the RESP as early in your child’s life as possible—you can reap the maximum benefits of this savings account and ease financial worries as your child approaches post-secondary age.

When is the best time to set up an RESP?

The ideal time to set up an RESP is as soon as possible after the beneficiary (the recipient of the funding) is born. This allows you, the subscriber (the person who sets up the account), to not only take better advantage of potential investment returns over time, but also maximize funds received through government education grants.

What are the different types of RESPs?

There are three different types of RESPs—individual, family, and group.

Individual RESPs

Individual RESPs are set up for a single beneficiary. To set up this plan, you do not need to be related to the beneficiary; for example, you can be a family friend.

These plans are self-directed, so you can decide how to invest the funds within the account. You will likely not need to make a minimum contribution or scheduled payments. Additionally, if the beneficiary meets certain eligibility criteria, they may receive funding into the account from several types of grants.

Family RESPs

A family RESP is best suited to families with two or more beneficiaries, each of whom must be related to you by blood or adoption.

Like individual RESPs, family plans are self-directed. They provide the opportunity to share contributions and grant money among the beneficiaries, so they are often a sensible choice for families with more than one child.

Group RESPs

Group RESPs are also called pooled RESPs or Scholarship Trust Plans (STPs). You can contribute to these accounts through a group scholarship provider, and you will likely be subject to a fixed payment schedule. These accounts are typically not self-directed; instead, the provider will invest in funds of their own selection.

What is the RESP contribution limit?

RESPs have a lifetime contribution limit of $50,000 per beneficiary. There is no annual limit to how much you can contribute, but it is widely recommended to make annual contributions of $2,500 per beneficiary to maximize grant funding.

Government grants and benefits for RESPs

The Government of Canada provides RESP grants based on contributions made to the RESP and family income. Further, some provinces also offer RESP grants, so it is important to review all of the criteria and make a strategic plan to maximize the grant money your RESP can earn.

Canada Learning Bond (CLB)

The CLB is a government benefit available to beneficiaries that meet certain eligibility criteria. The CLB pays $500 into the RESP the first year it is opened, and then another $100 each subsequent year, up to a maximum of $2,000, until the beneficiary turns 15. This benefit is available even if you do not make any contributions to the RESP.

Starting in April 2028, the Government of Canada will automatically open an RESP account to receive the CLB for all eligible children born in 2024 or later who do not already have an account set up for them by age four. Additionally, the age limit to claim the CLB retroactively will be extended from 20 to 30 years.

Canada Education Savings Grant (CESG)

The CESG is a government grant that, if maximized, can provide up to $7,200 to beneficiaries. To receive the maximum amount, subscribers must contribute $2,500 per year for 14 years (CESG will provide $500 each year), and then $1,000 in the 15th year (CESG will provide $200).

What are the taxation and withdrawal rules for RESPs?

Tax efficiency is one of the primary benefits of an RESP, and if you have a clear understanding of the withdrawal rules, you will likely reap the most rewards from these tax advantages.

You can make RESP withdrawals without penalty as soon as the beneficiary has enrolled in a post-secondary education program. RESP contributions are not tax deductible, but they are tax-sheltered for the duration they are held in the account and are not taxed upon withdrawal.

The following components are taxable to the RESP beneficiary when they are withdrawn:

  • Investment earnings on contributions
  • Funds received through any federal or provincial grants, and investment earnings on these funds

Since beneficiaries are usually young adults in a lower tax bracket at the time of withdrawal, they will likely pay little to no tax on these components. If the student does generate enough income to pay tax, they may still take advantage of various tax credits and deductions to help minimize that amount.

What happens if my child doesn’t use the RESP funds?

If your child, or beneficiary, decides not to attend a post-secondary education program or decides not to use the RESP funds, you have three options for what to do with your investment:

  1. Close the RESP and withdraw the funds. You won’t owe taxes on your contributions over the years, but any investment growth (called Accumulated Income Payments, or AIPs) will be taxed at the marginal rate of the person who opened the account. In addition to the marginal rate of tax, an additional 20% fee (12% in Quebec) will also be levied. All unused grant funds must be repaid to the government.
  2. Transfer funds to another RESP. In most cases, with only a few exceptions, the entire amount of an RESP, including any grants, can be transferred to another RESP without any penalty or repayments required. If the funds are in a family RESP, other beneficiaries can use the RESP contributions for their post-secondary education as you see fit.
  3. Transfer funds to an RRSP. Any unused RESP funds up to $50,000 can be transferred to your Registered Retirement Savings Plan (RRSP) or a spousal RRSP tax- and penalty-free, as long as you have the contribution room. You should note that funds can only be transferred to an RRSP if the RESP has been open for at least 10 years, all beneficiaries are over the age of 21 and are not pursuing post-secondary education, and all grants have been repaid to the government.

What types of investments can be held in an RESP?

Similar to other registered accounts, such as RRSPs and TFSAs, RESPs can hold a variety of investment assets including stocks, bonds, exchange-traded funds (ETFs), Guaranteed Investment Certificates (GICs), mutual funds, and private alternative investments. You can invest through your RESP much like you would through other registered accounts, tailoring your portfolio to your goals, risk tolerance, and timeline.

If you open an account for your child as early as possible and invest strategically, time is on your side. A longer investment timeframe allows for more potential income growth on contributions. That said, you should invest with discernment and carefully evaluate all investment options—including a review of their historical performance—for evidence of stability and resilience under various market conditions.

Promoting steady RESP growth with private alternative investments

When deciding how to grow your RESP, it’s wise to think beyond minimal-interest savings and aim for steady, reliable growth. If you’re a parent or grandparent looking for stable investment performance, investing in alternatives like private real estate investment trusts (REITs) can be an ideal strategy. Unlike stocks, which fluctuate with market highs and lows, private REITs can offer a stable foundation by tying returns directly to the market value and rental income of the bricks and mortar properties.

Private REITs not only help diversify your portfolio but also help manage risk and foster long-term financial stability. And if you’re looking for even more ways to diversify, consider private funds in areas like renewable energy infrastructure—an exciting and sustainable addition to your investment strategy.

Skyline offers many private alternative investments that may help maximize the value of your RESP to fund your child or grandchild’s education. These real estate and renewable infrastructure investments have a proven track record of resilience amid market uncertainty and have provided a historical annualized return of 8-14%.1 Skyline investments may help you accelerate savings not only in your RESP, but also in your RRSP, TFSA, or FHSA. When you couple smart investments with tax efficiencies in 2025/2026, you will not only unlock potential earnings, but also greater tax savings.

Private alternative investments can help maximize your RESP.
Explore how Skyline can help you reach your goals.

1 The performance quoted represents since inception. Full annualized return performance is as follows: Skyline Apartment REIT, 7.48% 1-year, 8.12% 3-year, 11.38% 5-year, 14.18% 10-year, 13.40% inception (June 1, 2006); Skyline Industrial REIT, 4.60% 1-year, 5.20% 3-year, 16.23% 5-year, 15.79% 10-year, 14.03% inception (January 10, 2012); Skyline Retail REIT, 8.26% 1-year, 7.76% 3-year, 10.18% 5-year, 12.34% 10-year, 11.68% inception (October 8, 2013); Skyline Clean Energy Fund, 9.01% 1-year, 9.16% 3-year, 9.26% 5-year, and 8.94% inception (May 3, 2018). Performance is for Class A of the funds and does not guarantee future results for Class F. All Skyline REIT’s figures as at September 30, 2025. Skyline Clean Energy Fund’s figures as at October 1, 2025.

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