A Registered Education Savings Plan (RESP) is a tax-advantaged, long-term savings vehicle that helps parents, grandparents, relatives and friends save for a child’s future post-secondary education or vocational training. Contributions grow tax-deferred inside the plan, and the government may add matching grants and other incentives to boost savings.
While tuition is often the biggest expense, RESP funds can cover a wide range of education-related costs—from textbooks and laptops to transit passes and housing. Using an RESP gives families flexibility when planning for the full cost of higher learning.
How does an RESP work?
An RESP is a registered account designed to help families accumulate money for a beneficiary’s post-secondary education. Contributions themselves are not tax-deductible, but investment growth inside the plan is tax-deferred. When the beneficiary withdraws the investment earnings and government grants for schooling, those amounts are taxed in the student’s hands, often at a lower rate.
Post-secondary costs can add up quickly. According to Statistics Canada, full‑time undergraduate tuition averaged $6,834 for the 2022–23 academic year, and some professional programs—such as dentistry—had annual fees near $23,963. Those figures cover tuition only; total costs rise further once books, technology, housing and living expenses are included. Projections suggest a four‑year degree could cost significantly more for students starting in later years, so starting to save early is important. For families who want a tailored estimate, tools such as the Embark calculator can provide a personalized projection.
What can RESP withdrawals be used for?
RESP proceeds can be used for most expenses directly tied to a beneficiary’s education. The intent of the spending must be education-related, but the covered items are broad. Common eligible expenses include:
- Books, course materials and supplies, including laptops and tablets
- Meal plans and on-campus food services
- Travel and transit costs related to attending school
- Student association, athletic and activity fees
- Residence fees, rent and other living costs while studying
- Tuition for accredited post-secondary programs—colleges, universities, technical and vocational schools
- Tuition for various recognized training institutes, such as private career schools and specialized programs
- Tuition at eligible institutions outside Canada, when the school qualifies as a recognized post-secondary institution
Types of RESP withdrawals
Funds from an RESP can be accessed once the beneficiary has completed high school and enrolled in a qualifying post-secondary program. Withdrawals are processed in different ways depending on the source of the money.
Contributions you made are returned tax-free as Post-Secondary Education Payments (PSE) and go to the plan subscriber. Investment earnings and government grant amounts are paid as Educational Assistance Payments (EAP) and are taxable in the beneficiary’s hands. Students often pay little or no tax on EAPs, however, because they typically have low income while in school.
There are limits on EAPs during the first months of enrollment: up to $8,000 for full‑time students and $4,000 for part‑time students during the first 13 weeks of a qualifying program. After a student has been enrolled full time for 13 consecutive weeks within a 12‑month period, larger EAPs can be taken as needed.
Timing matters: converting investments to cash and completing the paperwork can take time, so begin the withdrawal process several weeks before tuition or payment deadlines.
What happens to unused RESP money?
If a beneficiary does not pursue post-secondary education or decides not to use the RESP funds, several options are available:
- Transfer to a sibling. If another child in the family is eligible, assets can often be moved to that sibling’s RESP without penalties, subject to plan rules and age limits.
- Transfer earnings to an RRSP. Under specific conditions—such as the RESP being open for a minimum number of years and the beneficiary being over a certain age—up to a defined lifetime limit of accumulated income may be transferred to an RRSP if contribution room exists. Grants are generally returned to the government in this scenario.
- Keep the RESP open. Plans can remain available for many years (up to the legal account term), giving beneficiaries time to decide on further education or training. Keeping the plan open preserves the possibility of using the funds later.
Get guidance on using RESPs
Many families manage RESP contributions and withdrawals on their own, but professional advice can be helpful—especially for maximizing government grants and choosing suitable investments within the account. Financial advisors and specialized education-savings providers can help design a plan that matches your timeline, goals and risk tolerance, and can explain the rules around withdrawals, taxes and unused funds.
This article is sponsored.
This post is a paid feature that provides information about education savings and may highlight a client’s products or services. It was produced by MoneySense with assigned contributors and reviewed by the sponsoring organization.
Read more about RESPs:
- The top 5 questions about RESPs
- How much money does the government contribute to an RESP?
- RESP vs RRSP and TFSA: What’s the best option for education savings?
- What is an RESP?
- What to do when you have insufficient or unused RESP funds
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