Post-secondary education in Ontario is expensive — and getting more so every year. A year at the University of Toronto now costs $7,000–$14,000 in tuition alone, before housing, books, and living expenses. The Registered Education Savings Plan (RESP) is the most effective way Ontario families can save for these costs — and the government will contribute up to $7,200 in free grant money on top of your savings. This guide explains exactly how to use it.
How the RESP Works
An RESP is a tax-sheltered savings account specifically for a child's post-secondary education. Contributions are not tax-deductible, but all investment growth inside the account is tax-deferred. When the funds are withdrawn for education, they are taxed in the student's hands — not yours — which typically means little to no tax owing, since most students have low income.
The lifetime contribution limit per beneficiary is $50,000. There is no annual contribution limit, but the Canada Education Savings Grant (CESG) is calculated on the first $2,500 contributed per year — so spreading contributions over time maximizes the grant.
RESP Key Facts at a Glance
The CESG: Free Government Money You Shouldn't Leave Behind
The Canada Education Savings Grant (CESG) is the most compelling reason to open an RESP. The federal government contributes 20% of your annual RESP contribution, up to $500 per year per child. That's an immediate 20% return on your money before any investment growth.
CESG room accumulates from birth. If you open an RESP when your child is 5, you have 5 years of unused room — meaning you can contribute $5,000 in year one and receive $1,000 in CESG (catching up on two years at once, since the maximum catch-up is $1,000/year). The lifetime CESG maximum is $7,200.
CESG Accumulation: Starting at Birth vs. Age 5
Start at birth
Contributions: $2,500/year × 18 years = $45,000
CESG: $500/year × 14.4 years = $7,200 (max)
Total: $52,200+ (before growth)
Start at age 5
Contributions: $2,500/year × 13 years = $32,500
CESG: $7,200 max (takes longer to reach)
Total: $39,700+ (before growth)
Starting earlier means more years of compound growth on both your contributions and the grant money.
Additional CESG for Lower-Income Families
Families with net income below approximately $55,867 (2026 threshold) receive an additional 20% CESG on the first $500 contributed — meaning a total grant of 40% on the first $500, or $200 extra per year. Families between $55,867 and $111,733 receive an additional 10% on the first $500.
Canada Learning Bond (CLB)
The Canada Learning Bond is a grant for lower-income families that requires no RESP contribution to receive. Eligible families receive $500 when the RESP is opened and $100 per year for each subsequent year of eligibility, up to age 15. The maximum CLB is $2,000 per child. In Ontario, many eligible families never claim this grant simply because they haven't opened an RESP.
CLB Eligibility: Families receiving the National Child Benefit Supplement (NCBS) or with income below the threshold for the enhanced CESG are typically eligible. You don't need to contribute anything to receive the CLB — you just need to open the RESP.
Ontario Tuition Reality: What Are You Actually Saving For?
Ontario has some of the highest university tuition in Canada. Understanding the real cost helps you set a meaningful savings target.
| Program / School | Annual Tuition (2026) | 4-Year Total (tuition only) |
|---|---|---|
| Arts / Humanities (U of T, Western, Queens) | $7,000–$9,000 | $28,000–$36,000 |
| Engineering / Computer Science (Ontario) | $13,000–$16,000 | $52,000–$64,000 |
| Business (Rotman, Ivey, Schulich) | $14,000–$22,000 | $56,000–$88,000 |
| Ontario College (2-year diploma) | $3,500–$5,500 | $7,000–$11,000 |
| Skilled trades / apprenticeship | $1,500–$4,000 | Varies |
Add residence, food, books, and transportation, and a four-year Ontario university degree can easily cost $80,000–$120,000 in total. An RESP that reaches $50,000–$60,000 by the time your child turns 18 covers a significant portion of that — and reduces or eliminates the need for student loans.
How RESP Affects OSAP Eligibility
Ontario Student Assistance Program (OSAP) considers RESP assets when calculating financial need. RESP assets held by a parent are assessed at a lower rate than assets held directly by the student. Specifically, parental RESP assets are assessed at approximately 5–7% per year — meaning a $50,000 RESP reduces OSAP eligibility by roughly $2,500–$3,500 per year, not the full $50,000.
For most families, the tax-free growth and CESG grants far outweigh any reduction in OSAP eligibility. OSAP grants are also means-tested — families with higher incomes receive less OSAP regardless of RESP holdings.
How to Invest Your RESP
An RESP is not a savings account — it's an investment account. The type of investments you hold inside it should match your child's age and your time horizon.
Birth to age 10 (10+ years to university)
With a long time horizon, you can hold equity-based investments — index ETFs, equity mutual funds, or segregated funds. The goal is maximum growth. Short-term volatility doesn't matter when you have a decade-plus to recover.
Ages 10–14 (4–8 years to university)
Begin shifting toward a balanced mix of equities and fixed income. You still want growth, but you're starting to reduce the risk of a major market downturn wiping out gains right before you need the money.
Ages 14–17 (1–4 years to university)
Shift primarily to fixed income, GICs, and money market funds. Protecting what you've accumulated is now more important than chasing growth. A market crash in year 17 should not derail your child's education.
Segregated funds — available through licensed insurance advisors — offer a unique advantage for RESP investing: principal guarantees of 75–100% at maturity or death. If markets decline significantly just before your child starts school, a segregated fund with a maturity guarantee ensures you don't lose your original contributions.
RESP Action Checklist for Ontario Parents
Start Now — Every Year Matters
The RESP is one of the most straightforward financial wins available to Ontario parents. The CESG alone represents a guaranteed 20% return on your first $2,500 each year — no investment can reliably match that. Combined with tax-deferred growth and tax-efficient withdrawals in the student's hands, the RESP is a tool that every Ontario family with children should be using.
The right investment strategy inside the RESP — and how it fits with your broader financial plan — is worth discussing with a licensed advisor. I work with Ontario families to set up RESPs that are invested appropriately for their child's age and coordinated with their overall savings strategy.
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