The RESP (Registered Education Savings Plan), introduced in 1972 by Pierre Trudeau’s government, has evolved significantly since its inception. Initially created to help grandparents save for their children’s education.
When RESP was first introduced, the world was different: computers, the Internet, artificial intelligence, and virtual reality were unheard of. Most students stayed local for university or college, attending schools close to home due to the expense of moving or studying abroad. At that time, parents had unrestricted access to their RESP accounts and could use the funds as they saw fit for their child’s education.
However, a significant change occurred in 1998 when the government began matching parents’ RESP contributions. This shifted the RESP from a simple savings plan to a government-regulated program, complete with rules about where the funds could be used and what could be studied.
What parents weren’t told about RESP conditions
While banks and financial institutions promote the government’s 20% matching grant, they often downplay two critical conditions that your child must meet to access and use RESP funds for their education:
1. Your child must attend a government-approved institution or program
To use RESP funds, your child must select a university, college, or skills training program that has been pre-approved by the Government of Canada. This list of designated institutions is periodically updated, meaning when your child turns 18 and chooses their future career path, the program may or may not be eligible for the use of the RESP funds.
2. Proof of payment is required before accessing funds
Another stipulation often overlooked is that parents must provide a tuition payment receipt to the RESP provider (such as a bank or group RESP company) before they can access the funds. In effect, this requires parents to front the tuition fees and then seek reimbursement from the RESP account if the selected institution is approved.
In other words, you must have sufficient funds to pay the tuition upfront and then submit the receipt, along with proof of enrollment to the RESP promoter which is either the bank or a group RESP company. They will then review whether the institution or program qualifies under the government’s guidelines. Essentially, by investing in an RESP, parents are taking a gamble that, in 18 years, their child’s chosen education path will meet government requirements.
Case examples: The reality of government approval
Let’s consider two examples from the designated list:
- Elite College of Business and Healthcare – approved June 3, 2024
- Pharma-Medical Sciences College of Canada – approved June 8, 2022
These schools were only recently approved. Therefore, if a child had planned to attend one of these institutions before the approval date, they would not have been able to use their RESP funds.
Choosing between free money and educational freedom
The choice is clear. Parents must weigh the value of the government grant against the restrictions it imposes. With an RESP, the government regulates where and how funds are used, and these limitations may hinder your child’s freedom to pursue their dreams, particularly if they wish to study at an unapproved institution or internationally.
Alternatively, Canadian parents used Child Plan, a “Participating” whole life insurance plan, to save for their children’s future before RESP existed. “Participating” whole life insurance plans, available in Canada since 1847, offers your child the flexibility they will need in the future as the world changes rapidly. They provide a tax-free annual dividend for life and allow your child to use the accumulated cash value for any educational choice and path—without restrictions or conditions.
With a “Participating” whole life plan, your child has the freedom to study at any university or college worldwide, without government control or restrictions. For parents seeking freedom of choice for their children’s education and future, participating whole life insurance plans offer a powerful alternative to RESP.
Alternatively, Canadian parents used Child Plan, a “Participating” whole life insurance plan, to save for their children’s future before RESP existed. “Participating” whole life insurance plans, available in Canada since 1847, offers your child the flexibility they will need in the future as the world changes rapidly. They provide a tax-free annual dividend for life and allow your child to use the accumulated cash value for any educational choice and path—without restrictions or conditions.
With a “Participating” whole life plan, your child has the freedom to study at any university or college worldwide, without government control or restrictions. For parents seeking freedom of choice for their children’s education and future, participating whole life insurance plans offer a powerful alternative to RESP.
Alternatively, Canadian parents used Child Plan, a “Participating” whole life insurance plan, to save for their children’s future before RESP existed. “Participating” whole life insurance plans, available in Canada since 1847, offers your child the flexibility they will need in the future as the world changes rapidly. They provide a tax-free annual dividend for life and allow your child to use the accumulated cash value for any educational choice and path—without restrictions or conditions.
With a “Participating” whole life plan, your child has the freedom to study at any university or college worldwide, without government control or restrictions. For parents seeking freedom of choice for their children’s education and future, participating whole life insurance plans offer a powerful alternative to RESP.
