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What to do when you have insufficient or unused RESP funds

According to Statistics Canada, the average cost of undergraduate tuition nationally for the 2022/2023 school year was $6,834 per year. The costs can be greater or smaller depending on the program of study, and tuition represents only a portion of the total cost of post-secondary education. In fact, the data shows a four-year university program can cost $96,004 for a student living on campus and $48,074 for a student living at home.

In contrast, the average RESP balance for children aged 14 to 17 was $22,180 at the end of 2019. That’s enough to fund approximately one quarter to one half of the cost of a typical four-year university program. What should parents do to close the gap?

What if the RESP falls short of covering education costs?

Planning for RESP withdrawals can be more art than science. A child’s post-secondary aspirations or program, their scholarship entitlement, or the performance of an RESP account’s investments could lead to an excess balance in the account. More commonly, there is a shortfall, and that leaves parents and especially students in a position where other sources of education financing need to be considered.

In these situations, using funds from a tax-free savings account (TFSA), a high-interest savings account or a non-registered investment account may be appropriate. Applying for government grants and loans is another option.

Government grants and loans for education in Canada

Some parents are not able or willing to contribute to post-secondary education costs for their children. Part-time work during high school or post-secondary schooling is one way students can pay for their education. Federal or provincial grants and loans are another source of funding.

At the federal level, the Canada Student Grant program is for full-time students in financial need who apply for student aid provincially. In order to qualify for a grant, total family income must be below a pre-determined threshold that depends on the number of people in the family. The grant cut-off is $112,041 in gross household income for a family of three and is higher for larger families.

The maximum grant for the 2023/2024 school year is $4,200 per year or $525 per month of study.

The Canada Student Loan program is available to full- and part-time students to finance up to 60% of their tuition cost. As of April 1, 2023, no interest is charged on federal student loans.


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