Government funding to post-secondary education has declined over the years and Canadian students can no longer rely on assistance programs. A child born today may face education and living-expense costs well over $100,000 for a standard four-year degree program by 2020.* According to recent census data, university graduates earn an average of $1 million more over their lifetimes than do high school graduates.*

An RESP is a registered plan that allows family and/or friends to contribute towards a child's education. Contributions to the plan can grow tax-free over the life of the plan. Some benefits include:

• Tax-differed investment growth Contributions to an RESP can accumulate and grow tax-free over the life of the plan. When withdrawals are made for the purpose of education, only the growth and grant portion of the plan is taxable in the hands of a child.
• Easy access to government grants RESP contributions may qualify for the CESG. Through the Canada Education Savings Grant (CESG), the federal government will contribute 20 per cent of your annual RESP contribution to a maximum of $500 per child per year.
• More control and flexibility With an RESP, you can control how much you contribute each year. You can invest in a portfolio of growth-oriented investments and there is no charge for opening or maintaining an RESP account. There are also no foreign content restrictions and low minimum investments are required.
• The total RESP lifetime contribution limit for each RESP beneficiary is $50,000.

What is the Canada Education Savings Grant (CESG)?

Through the CESG, the federal government adds 20% to the first $2,500 of annual contributions you make to an RESP up to a maximum grant of $500 per year.

How does it work?

The CESG is available each year until the beneficiary turns 18. The total grant payments to a beneficiary cannot exceed $7,200 over the life of the plan. Any unused CESG grant room can be carried forward to future years.