Registered Education Saving Plans

Registered Education Saving Plans (RESP) are investment accounts that allow contributors to avoid taxes on post-secondary education savings. The foregone tax revenue is tantamount to a grant payable to RESP investors. This indirect grant is only useful to individuals or families wealthy enough to set aside thousands of dollars each year.

Since 1998, the Government of Canada has been paying 20% of the first $2,000 in contributions made into an RESP each year on behalf of an eligible beneficiary. This grant is called a Canada Education Savings Grant (CESG).

If every eligible parent participated in the CESG program and invested the maximum $2,000 per year, the federal government would spend $2.9 billion every year. The projected federal expenditure for a needs-based grants program, which could replace the Canada Student Loan Program, is between $1.8 and $3 billion annually. Such a program would provide non-repayable grants to post-secondary students.

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