RESPs, Now Is the Time: Help Your Child Graduate University Debt Free
It is that time of year again. New backpacks, fresh notebooks, the smell of a brand new pair of runners. There is something hopeful about a new school year, whether your little one is heading into Grade 1 or their final year of high school. But for many mothers, that excitement comes with a quieter thought hiding underneath it: how are we going to pay for university?
If that thought has ever crossed your mind, this blog post is for you… Because the truth is, the best time to answer that question was years ago, and the second best time is right now.
Let’s talk about RESPs, why they matter, and how a little planning today can send your child off to university with a degree or a diploma, and zero student debt.
First, let's acknowledge the hard part
Before we get into the numbers, can we just take a moment? You have worked hard. Really hard. Raising a child while building a career, supporting your household, and trying to save at the same time is not for the faint of heart. Every dollar you set aside for your children has been earned, and it deserves to work as hard as you did to earn it.
That is exactly what an RESP does. It takes the money you have worked for and gives it the best possible chance to grow into what your child needs when the time comes.
What is an RESP?
RESP stands for Registered Education Savings Plan. In plain language, it is a special savings account designed for one job only: paying for education after high school.
Here is what makes it different from a regular savings account:
Your contributions grow tax free. You contribute money you have already paid tax on, and the investment earnings inside the plan grow without being taxed year after year.
The government adds free money. Through the Canada Education Savings Grant (CESG), the government matches 20% of what you contribute, up to $500 per child per year, and up to $7,200 over the life of the plan. That is free money, no repayment, no catch.
There is even more for lower-income families. The Canada Learning Bond gives eligible families up to $2,000 with no contribution required at all. Some families qualify and never claim it because they do not know it exists.
Withdrawals are designed to be tax friendly. When your child heads to university, the money comes out in a way that keeps taxes low, usually close to zero, because students typically have little to no income of their own.
The lifetime contribution limit is $50,000 per child, so there is plenty of room to build a meaningful fund.
Think about that for a second. Where else can you get a guaranteed 20% return on your money before the markets even do anything? You cannot. The Canada Education Savings Grant is the closest thing to a sure thing in personal finance.
Why "now" is the time
There are two reasons the answer is always "now," no matter how old your child is.
Reason one: compound growth loves time
Investment growth is not linear. It snowballs. The money you contribute when your child is five has more years to grow than money added when they are fifteen. Every year you wait is a year of growth you cannot get back. Starting early does not mean contributing more, it means stretching the same dollars further.
Reason two: grant room does not wait forever
Here is the part most people do not know. If you do not contribute in a given year, your CESG room carries forward, so you can catch up later. That is generous. But you can only catch up one year at a time. If you fall years behind, you may never fully catch up, and that free government money could be left on the table permanently.
Every year you skip is a year you are turning down up to $500 of free money. Nobody would do that on purpose.
A picture of what it could look like
Imagine contributing $2,500 a year for your child's education. Every single year, the government adds 20% on top, $500 of free money, automatically. Over the full grant period that adds up to thousands of dollars of grants, plus decades of tax-free growth, sitting there waiting for when your child is ready to start their post-secondary education.
You do not need to be wealthy to do this. A modest amount, contributed consistently, is exactly how ordinary families build extraordinary outcomes. That is the whole point of the plan: it was designed to level the playing field.
Withdrawals for university: how it actually works
A lot of parents worry that an RESP is complicated to use. It is not. Here is how it works once your child is ready for university.
When your child is enrolled in a qualifying post-secondary program, you can start taking money out. The plan has two parts, and each one is handled differently:
The contribution part (your money). This comes out completely tax free. It is your own money coming back to you, so the government treats it exactly that way.
The grant and growth part (the earned money). This is called an Educational Assistance Payment, and it is taxable in your child's hands, not yours. Because most students have very little income, they usually pay little or no tax on it.
In practical terms, your provider will ask for proof of enrollment, and once that is confirmed, the money starts flowing to support tuition, books, housing, and everything else that comes with campus life.
This is where the magic happens. Your child gets to focus on their studies instead of the clock ticking on their student loans. And when they graduate, they walk across that stage carrying a diploma instead of a debt statement.
The graduate you are dreaming of
Here is the reality of what university costs in Canada today. Statistics Canada estimates that post-secondary graduates who borrow money finish school owing roughly $28,000 on average. For some it is much more.
Now picture the alternative. Your daughter graduates with zero debt, no payments looming, no interest building. Her first paycheque is hers to keep. She can buy her first car, save for a down payment, or start investing for her own future instead of paying off the past.
That is not a small gift. That is the difference between starting adulthood in the red and starting it in the clear. And it sets the tone for how she will handle money for the rest of her life. Generational wealth is built exactly this way, one thoughtful decision at a time.
What if you are starting late? Start anyway
If your child is already in high school, do not assume it is too late. It is not.
Even a few years of contributions still earn the government grant, and even a short runway of growth beats no runway at all. Some money for first-year tuition is better than no money, and every grant dollar you claim is a dollar you never have to borrow. The only truly expensive time to start is never.
Why work with a planner?
You can open an RESP on your own, for sure. But a financial planner does more than open an account. She looks at the whole picture: how much makes sense for your family to contribute each month, how to invest it so it grows without unnecessary risk, how to make sure every grant you qualify for is actually claimed, and how to structure withdrawals later so the tax picture stays as small as possible.
That is what I do every day at Laideen & Co. I have helped families turn small, steady habits into education funds that change their children's futures. No judgment, no complicated jargon, just clear, warm guidance from someone who genuinely cares about your family's future.
This back-to-school season, give your child the gift that keeps giving long after the first year of university is over. Open an RESP, contribute what you can, and let the government and compound growth do the heavy lifting.
Your children have watched you work hard all these years. Let your money do the same for them.
Ready to set your child up to graduate debt free? Book a consultation with me today, and let us build the plan together. Book your consultation 👋🏾
Meet Laideen
Laideen Thomas is the founder of Laideen & Co. Financial Group Ltd., a wealth management firm dedicated to helping women build multi-generational financial security. Based in Toronto, Ontario.
