Post Secondary Financing

Question 1

What is a Canada Education Savings Grant (CESG)

Answer 1

The CESG consists of a basic grant of 20% on the first $2500 in annual personal contributions to an RESP

The additional amount of CESG is 20% on first $500 of annual contributions from families with adjusted net income of >$53359

If the family’s net income is in between $53359 and $106717, the grant is 10% on the first $500

The CESG is available until the year when the beneficiary turns 17, and has a maximum of $7200

However, a beneficiary is only eligible for the CESG if one of the these two conditions are met: a minimum of $2,000 was contributed to (and not withdrawn from) the RESP of the child before the end of the calendar year the beneficiary turned 15, or a minimum annual contribution of $100 was made to (and not withdrawn from) the RESP in at least four of the years before the end of the calendar year the beneficiary turned 15

The CESG is returned to the government if the beneficiary does not go into post secondary education

Question 2

What is a RESP

Answer 2

A Registered Education Savings Plan (RESP) is a long term savings plan to help save for post-secondary education, including universities, colleges, and trade schools

The subscriber is the person who set up the RESP (often the parent), and promoter is the beneficiary of the RESP (usually the child)

However, an adult can open an RESP for themselves

When you open an RESP, you can ask your financial institution to apply for benefits like the Canada Learning Bond (CLB) and the Canada Education Savings Grant (CESG)

Question 3

What are subscribers and beneficiaries

Answer 3

There are generally no restrictions on who can become a subscriber, with the exception of family plans

An individual and their partner can be joint subscribers

An individual can be designated as a beneficiary only if their SIN is given to the promoter, while being a resident of Canada when the designation is made

The lifetime amount that can be contributed to an RESP is $50000, for a single beneficiary - there is no annual limit to how much can be contributed