Using an RESP for university

An RESP holds money from different places. Some is what you, the subscriber, put in. Some is federal benefit money, like the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB). The rest is growth on all of it.

When your student starts school, those two kinds of money leave the plan in different ways. Your contributions come back as a refund of contributions. Grants, bonds and growth come out as educational assistance payments, or EAPs.

The split matters because only the EAP part is taxable. ESDC notes that students often have little income while they study. So a student may pay little or no tax on an EAP. That's the main reason families save this way.

The promoter, which is the financial organization holding the plan, reports each EAP in box 042 of a T4A slip. Your student gets a copy and reports the EAP as income for the year it was paid.

A refund of contributions is different. CRA says promoters don't issue a T4A slip for it, and it isn't income on anyone's return. The promoter can pay contributions to the subscriber or straight to the student.

There's one residency rule to know. A student must be a resident of Canada to receive the CESG or CLB part of an EAP. If your student plans to study abroad, ask the promoter early how that affects the grant portion.

EAP money can go to tuition, books, tools, transportation and rent, according to ESDC. The promoter decides what counts as a reasonable expense under the Income Tax Act and the plan. Some promoters ask for proof of the expense.

This is the rule that surprises families in September. For full-time study, EAPs are capped at $8,000 during the first 13 consecutive weeks of the program. After 13 weeks there's no cap, as long as the student still qualifies.

The cap can come back. CRA says that if there's a 12-month period in which the student isn't enrolled in a qualifying program for 13 consecutive weeks, the $8,000 maximum applies again. That can matter after a long break.

Part-time study has its own cap. EAPs for a specified (part-time) program are limited to $4,000 for the 13-week period ending when the payment is made.

You have two ways around a tight first term. The promoter can add tax-free contributions on top of the EAP. Or, with the promoter's help, you can ask the Canada Education Savings Program to approve a larger EAP. That request needs verified proof of your school costs.

First-term bills often include tuition and residence together. Compare the real numbers on pages like U of T tuition and fees or Waterloo tuition and fees before you choose the mix.

Before paying an EAP, the promoter checks that the school is eligible. In Canada, ESDC points to its List of Designated Educational Institutions and its List of Certified Institutions. If a school isn't listed, a provincial designation under the Canada Student Loans Act may still work.

The program has to be long enough. A qualifying (full-time) program lasts at least three consecutive weeks with at least 10 hours a week of courses or work. A specified (part-time) program lasts at least three consecutive weeks with at least 12 hours a month. A student in a part-time program must be at least 16.

Outside Canada, CRA counts a university where the student is full-time in a course of at least three consecutive weeks. Other schools abroad need a course of at least 13 consecutive weeks.

Your student will need official proof of enrolment. Ask the registrar's office for it as soon as fees are paid. EAPs can also be paid for up to six months after enrolment ends, if the plan allows it.

The CESG pays 20% of the first $2,500 you contribute each year, up to $500. That basic grant doesn't depend on income. The lifetime maximum is $7,200 per beneficiary.

The grant stops at the end of the calendar year the child turns 17. For a student born in 2009, that's December 31, 2026. A contribution made in 2027 earns no CESG for that student.

There's a catch for 16- and 17-year-olds. The plan only qualifies if, by the end of the year the child turned 15, at least $2,000 had been contributed and not withdrawn. The other option is at least $100 a year in any four earlier years. If neither happened, late contributions won't earn the grant.

Unused grant room carries forward. If your family has room, you can contribute up to $5,000 in one year and receive up to $1,000 of CESG. Families with lower income can also get the additional CESG. For 2026, ESDC lists $100 for adjusted family net income below $58,523 and $50 between $58,523 and $117,045.

Contributions have their own ceiling. CRA sets a lifetime limit of $50,000 for each beneficiary across all RESPs. Going over triggers a tax of 1% a month on the excess until it's withdrawn.

The CLB is for children from low-income families who were born in 2004 or later. If your student was born in 2004 or later, they meet the birth-year rule. Family income decides the rest.

It pays $500 for the first eligible year, then $100 for each later eligible year up to age 15. The maximum is $2,000. Nobody has to contribute a cent to receive it. The CLB is retroactive, so missed years can still be paid.

A primary caregiver can request it until the day before the child turns 18. After that, the student can request it alone until the day before turning 21. ESDC says students aged 18 to 20 can open their own RESP to do this.

For July 1, 2026, to June 30, 2027, ESDC's income line for families with 1 to 3 children is $58,523 or less. The student also needs a Social Insurance Number.

Ontario's OSAP page says that using money from your RESP won't affect how much OSAP you can get. That's the plain answer most families need.

The 2026-27 full-time application backs this up in two places. RESPs, the CESG and the CLB are listed under income you don't report. RESPs are also listed under assets and savings you don't report.

Check these lines again in the OSAP application for the year you start. Our OSAP guide covers the application itself. You can also check when OSAP opens for your year.

An EAP still counts as taxable income on the student's tax return. That's a federal tax matter, separate from the OSAP rule above.

An RESP isn't only for university. ESDC says it can pay for trade schools, CEGEPs, colleges and apprenticeship programs too, as long as the school and program are eligible. If your student is weighing options, read university vs college in Ontario.

A gap year doesn't close the plan. If the money isn't used for school, ESDC lists four choices. You can keep the plan open, replace the beneficiary, transfer the money to another registered plan, or close it. Our gap year and deferral guide covers the admission side.

If nobody uses the plan for school, the CESG and CLB go back to the government. Growth may come out as an accumulated income payment to the subscriber. CRA adds a 20% tax on top of regular income tax, or 12% in Quebec. If you're the original subscriber, you can move up to $50,000 into an RRSP over your lifetime to reduce that tax, if you have room.

In the spring of Grade 12, ask your promoter for its withdrawal forms and what proof of enrolment it accepts.

Then sketch first-year costs. Our paying for university guide covers tuition, aid and loans for parents. Decide how much to draw as an EAP and how much as contributions. Keep the $8,000 first-13-week cap in mind.

Each time an EAP is paid, your student gets a notice showing how much CESG it contained. Keep those notices. ESDC says the student must track the CESG received and repay anything above $7,200.