Every parent shares the same hope – watching their child reach their full potential. A quality post-secondary education remains one of the most powerful gifts you can provide, opening doors to better career prospects and higher lifetime earnings. But with education costs continuing to climb, smart planning and investing isn't just helpful – it's essential.

The good news is that Canada offers parents an incredibly powerful tool: the Registered Education Savings Plan (RESP). This isn't just another savings account - it's a government-supported program that can supercharge your education savings through generous grants and tax-deferred growth.

The reality of education costs today

The important things in life often cost a significant amount. In most developed nations around the world post-secondary education can be a significant investment. The average cost of a four-year university education in Canada has now crossed the $100,000 threshold for the first time, with projections suggesting it could reach $192,000 by 2042.¹ For the 2024-2025 academic year, domestic undergraduate students are paying an average of $7,360 in tuition alone,² representing a 2.9% increase from the previous year.²

In addition, the annual inflation for education has increased consistently over the years, outpacing the general rate of inflation. Between 2000 and 2020, average undergraduate tuition fees jumped 115% while the overall Consumer Price Index (CPI) rose just 44%.³ This trend shows no signs of slowing. Early planning and saving to achieve one’s education funding goals more crucial than ever.

Why post-secondary education matters more than ever

The investment in education can pay dividends throughout your child's career. University graduates with bachelor's degrees earn an average of $68,300 annually – 24% more than the national average of $51,900.⁴ The premium increases with higher education: those with a master's degree average $84,400, while doctoral graduates earn $100,000 on average.⁴

Beyond earnings, the employment advantages are substantial. In 2024, the employment rate for university degree holders aged 25 and over was 74%, compared to just 52.6% for high school graduates and 31.5% for those without any degree, certificate, or diploma.⁵ Post-secondary education can provide career stability that becomes increasingly valuable in an uncertain economy.

RESPs: your education savings powerhouse

The RESP can help transform education saving from a burden into an opportunity. Here are a few things that make it so powerful:

• Grants from the government: A key benefit is the Canada Education Savings Grant (CESG), which provides a 20% match on your first $2,500 of annual contributions. This could add up to $500 per year to your savings.⁶ Over each eligible beneficiary’s lifetime, you can receive a maximum of $7,200 in grants.⁶ And, depending upon eligibility, a child may also qualify for a Canada Learning Bond.
• Tax-deferred growth: Your investments grow completely tax deferred inside the RESPs.⁷ When funds are withdrawn for education, the original contributions are received tax-free, while the accumulated investment income and government contributions are generally taxed in your child's hands.⁸ Since students typically have low incomes, they may pay little to no tax on withdrawals.
• Generous contribution room: There's no annual contribution limit, giving you flexibility in how much you contribute each year. The lifetime maximum is $50,000 per beneficiary.⁷
• Investment flexibility: RESPs can generally hold various investments including GICs, mutual funds, ETFs, stocks, and bonds,⁷ allowing you to choose options that match your risk profile and investment time horizon.
• Contribution protection: If your child doesn't pursue post-secondary education, your contributions can generally be returned to you tax-free. 

 

The power of starting early

Time is your greatest ally in education savings. Starting early may provide three crucial advantages:

• Maximizing government grants: Contribute annually to maximize your beneficiary’s access to CESG. Wait too long, and you could miss out on thousands in grant money.

• Compound growth: Even modest, regular contributions grow substantially over time. A monthly contribution of $200 from birth to age 17 totals $40,800 in contributions. That could grow much more with even modest investment returns and government grants – providing a significant boost to your savings.

• Reduced financial pressure: Spreading contributions over many years can make education funding less overwhelming. It may be more manageable for a family to contribute $200 each month, rather than trying to save $40,000 in the final few years before university.

The benefits of investing regularly

 

Your next step on the education path

These numbers and options can seem complex, but you don't need to navigate them alone. The right strategy depends on your family's unique circumstances, budget, and goals. Some families benefit from aggressive early contributions to maximize grants quickly, while others find steady, modest monthly contributions more manageable.

Contact us today to find out how we can help you achieve your education goals for your next generation. Together, we'll create a personalized education plan that fits your budget, maximizes government benefits, and puts your child on the path to educational success. 

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Sources

1. Embark Student Corp. "Cost of University Education." Learning Centre. https://www.embark.ca/learning-centre/cost-of-university-education
2. Robertson College. "Average Tuition in Canada." Blog. https://www.robertsoncollege.com/blog/studying-at-robertson/average-tuition-in-canada/
3. Canadian Federation of Students. "Education for All: Report on Post-Secondary Education in Canada." March 2022. https://assets.nationbuilder.com/cfsfcee/pages/2580/attachments/original/1648069400/Education4All-Report-EN.pdf?1648069400
4. Universities Canada. "Universities Help Canadians Get Ahead: Quick Facts." https://univcan.ca/publication/universities-help-canadians-get-ahead-quick-facts/
5. Statistics Canada. "Labour Force Characteristics by Educational Attainment, Monthly, Seasonally Adjusted." Table 14-10-0118-01. https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1410011801
6. Government of Canada. "Education Savings - Canada Education Savings Grant." https://www.canada.ca/en/services/benefits/education/education-savings.html
7. RBC Royal Bank. “Registered Education Savings Plan (RESP)”. Personal Banking. https://www.rbcroyalbank.com/investments/resp.html?msockid=023d3fe58b8d60f91b1e2b4d8a276181
8. Embark Student Corp. "RESP Benefits." Learning Centre. https://www.embark.ca/learning-centre/resp-benefits

 

This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc.*, RBC Phillips, Hager & North Investment Counsel Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and their affiliate, Royal Mutual Funds Inc. (RMFI). *Member – Canada Investor Protection Fund. Each of the Companies, RMFI and Royal Bank of Canada are separate corporate entities which are affiliated. The information provided in this document should only be used in conjunction with a discussion with a qualified professional advisor when planning to implement a strategy. â / ™ Trademark(s) of Royal Bank of Canada. Used under licence. © Royal Bank of Canada. (2025). All rights reserved.