The RESP: a measured bet, not a blind risk
Many parents hesitate to invest in a Registered Education Savings Plan (RESP) out of fear that their child might not pursue post-secondary studies. This concern is understandable no one can predict a child’s academic future with certainty. But thinking that an RESP is a poor choice under uncertainty means misunderstanding its flexibility, its exceptional financial advantages, and its fallback options.
Investing in an RESP is far more than a bet on school attendance. It’s a highly efficient investment strategy, enhanced by government incentives and governed by rules that protect your capital while offering significant flexibility.
1. The grants: guaranteed and immediate returns
One of the greatest advantages of the RESP is access to government grants:
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The Canada Education Savings Grant (CESG) contributes 20% of annual contributions—up to $500 per child per year, with a lifetime maximum of $7,200.
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Quebec adds an additional 10% through the Quebec Education Savings Incentive (QESI), up to $250 per year, with a lifetime maximum of $3,600.
This means that for every $1,000 contributed, you receive up to $300 in “free” government grants a guaranteed 30% return, regardless of market conditions.
No other savings vehicle offers such a powerful, risk-free boost.
2. Flexible options if the child doesn’t pursue post-secondary education
Contrary to what many believe, the money invested in an RESP is not lost if your child doesn’t pursue post-secondary education.
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Withdraw your contributions at any time, without penalty. You recover 100% of the money you invested.
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The grants must be repaid, but only the unused portion.
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The investment earnings (interest, dividends, gains) can be transferred to an RRSP (up to $50,000 if you have unused contribution room) or withdrawn as an Accumulated Income Payment (AIP), subject to an additional 20% tax (or 12% in Quebec).
In other words, you only lose the unused grant portion, but your capital and investment earnings remain accessible with tax-efficient options.
Additionally, an RESP can stay open for up to 35 years (or 36 in some cases), giving the child plenty of time to return to education later whether it’s college, university, vocational training, or an adult education program.
Many parents mistakenly believe that the RESP only applies to university studies. In reality, the definition of “eligible studies” is much broader:
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Vocational Studies Diploma (DEP)
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Attestation of College Studies (AEC)
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Recognized online or distance learning programs
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Skilled trades training programs
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Technical colleges, private institutions, and more
The Government of Canada recognizes hundreds of post-secondary institutions and programs as eligible. So even if your child doesn’t take the traditional academic path, it’s very likely that the RESP funds can still be used.
Beyond the financial aspect, the RESP sends a clear message to your child: education is valued. It’s a tool to foster early conversations about aspirations, discipline, and future possibilities.
Studies have shown that children whose parents save in an RESP are more likely to pursue post-secondary education, regardless of the amount saved (University of Toronto, 2016).
Saying, “I won’t contribute to an RESP because I don’t know if my child will study,” means giving up thousands of dollars in free government grants, one of the most powerful savings vehicles in Canada, and surprisingly generous flexibility.
The best approach? Contribute while you can, maximize the grants, and adjust later based on your child’s actual path.
The real risk isn’t contributing too much to an RESP. The real risk is missing the opportunity to invest in your child’s future.
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Canada Education Savings Grant (CESG) — Government of Canada
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Government of Québec, Québec Education Savings Incentive (QESI).
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Retraite Québec, RESP – Terms and Options
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Université de Toronto, Child Savings and Post-Secondary Education Outcomes, 2016.
