Saving money for your children’s post-secondary education is probably one of your biggest burdens as a parent.
Fortunately, the Canadian government has programs in place to help parents overcome this daunting task, one of which is the Registered Education Savings Plan (RESP).
If you sign up for this plan, you’ll also have the opportunity to get an annual matching contribution from the government, which is called Canada Education Savings Grant (CESG).
Discover how you can maximize CESG to save more quickly for your child’s college education.
What Is CESG?
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CESG refers to a federal incentive program that aims to encourage parents to save for their children’s education by reducing their financial burden.
Through this program, the government will basically provide free money toward your child’s future education.
To gain access to CESG, you must make contributions to your kid’s RESP account.
You can use the money accumulated in the account to fund any type of post-secondary education, including:
- General or vocational college.
- Trade school.
- Apprentice program.
Funds in your child’s RESP will keep growing tax-free until you withdraw them.
If you fail to deposit money into your account in any given year, you’re allowed to catch up in future years.
Anyone can start an RESP account for a child, even if they aren’t the child’s parent.
How to Qualify for CESG
To be eligible for Canada Education Savings Grant (CESG), your child must meet the following requirements:
- They’re a Canadian citizen.
- They have a Social Insurance Number.
- They’re no older than 17 years old.
- They have an RESP account in their name.
- They’ve completed an application for the grant.
How Much Can Your Child Get?
There are two kinds of CESG: basic CESG and additional CESG.
For basic CESG, the government will match 20% of the amount you contribute per year.
So, if you’re depositing $1,000 into your account, you’ll receive a grant of $200 for a total of $1,200.
If you’re thinking of maximizing the Canada Education Savings Grant (CESG) for your child, you need to contribute $2,500 or more because the maximum grant amount in any given year is $500.
The maximum amount of CESG your child can get is $7,200.
If you belong to a low or middle-income family, you may qualify for additional CESG.
Depending on your family’s income, you’ll receive an additional grant of 10% or 20% on the first $500 you contribute to your kid’s RESP each year.
Families making less than $47,630 can get an additional grant of 20%, while those earning $47,631 to $95,259 are eligible for an extra 10% in grants.
How to Apply for CESG
Gaining access to CESG is easy.
If you don’t have an RESP account for your child yet, you can start one with an RESP service provider.
After your account is approved, simply ask the service provider to apply for CESG on your behalf.
To make sure everything goes smoothly, it’s essential that you do some research to find the right RESP service provider.
Choose a reputable provider that has extensive experience in providing RESP services and offers competitive fees.
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