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Comparing education savings options

How do other education savings options differ from RESPs?

  • Unlike Registered Education Savings Plans (RESPs), the government does not add grants to your savings. Keep that in mind as you choose how you’ll save.
  • There may be no rules about what your child does with the money when they reach legal age. They can use the money to pay for their education, but they might also decide to use it for a first home, or keep it for other purposes.

Tip: For some families, having fewer rules is a good thing. For others, it could lead to problems. Suppose your child decides to use the money in some way you don’t approve of, such as buying a shiny new sports car instead of going to university? If this worries you, look for savings plans that offer ways to keep control of the money.

How do these other ways of saving compare to RESPs?

The chart below sums up the main differences.

 

RESP

In-trust account

 

Living (inter vivos) trust

 

Juvenile life insurance

 

You have limits on how much you save

Yes

No

No

Sometimes

You get government grants

Yes

No

No

No

You sign a formal contract

Yes

No

Yes

Yes

You manage your investments

Optional

Optional

Optional

Optional

You get tax advantages

Yes

Optional

Optional

Yes

There are rules about how the child uses your money

Yes

No

Optional

No

You can get back the money you put into the account if you cancel later, or if your child does not go to college or university 

Yes

No

Optional

Yes

Remember: An RESP is not the only way to save for a child’s education.

Many people choose some form of trust or life insurance for other reasons to shelter their savings from tax. This approach can make sense if you have extra savings, or if you need more choices than an RESP can offer.