August 28th, 2025 by Kyle Taylor, Wealth Advisor and Portfolio Manager
Maximizing your RESP and Back to School Shopping Amid Rising Prices
Back to school means the return to routine for parents and children but also highlights the growing costs of modern parenthood. According to the Retail Council of Canada, parents spend on average, $600 to $750 per child on back to school shopping, up from $500 in 2023.
While these costs may be some of the most visible, the cost of higher education is also climbing. Today, a four-year undergraduate program averages about $7,360 per year, or over $100,000 when you factor in textbooks and living expenses. To make matters worse, assuming inflation at 2% means a child who is currently 12 years old and plans to begin school at age 18 would see the per year cost reach $9,063.
Fortunately, parents – and even grandparents – can make decisions to help mitigate these costs with smarter budgeting for immediate needs and long-term savings through the Registered Education Savings Plan (RESP).
Smart Back to School Budgeting
Rising costs of almost everything has been a focal point in 2025 as tariffs have created concerns prices will continue higher. Shopping for the first day of school is no different but there are some tips we can offer.
Make a plan and take your time
Some may have felt pressured this year to shop early due to tariff concerns, but teachers often help with a list of what’s truly needed for the year ahead. Additionally, clothing and shoes tend to be a big expense, so it’s best to buy it as you need it. Kids grow quickly, so buying some clothing and shoes later in the year can help avoid wasted spending.
Shop second-hand or swap
Older siblings, neighbors, community groups, and Facebook marketplace can be a great way to save on expensive new school materials and clothes. Selling outgrown items can also help offset costs.
Look for student plans
For students in upper years or post-secondary, take advantage of student plans where possible. This can include cell phone plans, bank accounts, student line of credits, or the discount cards students sometimes get with their tuition. Lines of credit and credit cards offered to students can also be an effective way of building your credit history and teaching financial responsibility.
Maximizing the Registered Education Savings Plan
What is the RESP?
The RESP is designed to help parents or grandparents save for a child’s post-secondary education and benefit from the tax deferred growth of savings and government incentives. Just as with a TFSA or RRSP, the savings within the RESP can be invested in line with the time horizon and objectives of the account. This may include stocks, bonds, exchange traded funds, and mutual funds among others.
One common misconception about the RESP is that the account must be used for university. This is untrue. The RESP can be used for university, college, trade school, and apprenticeship programs. If you are uncertain about whether a program meets the requirements, the institution holding the RESP can confirm if it qualifies.
Contribution Tips
- The maximum lifetime contribution limit is $50,000 per child. There is no annual maximum.
- The Canada Education Savings Grant (CESG) provides a 20% match on the first $2,500 contributed annually, up to $500 per year and $7,200 total.
- Contributions can also capture missed years to a maximum of $1,000 in grants each year until fully caught up. This offers an opportunity to catch-up if the RESP isn’t open when the child is first born.
While the $7,200 in grant money is a key benefit, the math favours investing a lot early and thinking about the grant second.
For example,
- Investing $2,500 annually maximizes the grant and equates to $96,214 after 18 years (assuming a 6% rate of return).
- A lump sum of $50,000 at birth equates to equates to $144,144 after 18 years, even though the grant is smaller.
For many Canadian households, the answer is somewhere in between. Families may have more to contribute some years and less the next. Ultimately, what you choose to save often comes with competing financial goals and the knowledge that you may end up encouraging your child to contribute themselves rather than offer full assistance. Regardless, the RESP can be an important tool with the primary benefit being the tax-free compounding growth.
Note: RESP contributions are not tax-deductible.
Withdrawing From the RESP
Withdrawing from a RESP often takes more planning and consideration than people realize and speaking with a knowledgeable advisor can save tax dollars and headache. Importantly, funds within the RESP are not only for tuition and can instead be used for any purpose to support the beneficiary during their education.
When withdrawing from the RESP there are two categories for which the funds available in the account are classified.
- Post-Secondary Education (PSE) withdrawals: Includes the amounts originally contributed into the RESP. These amounts are tax-free when withdrawn.
- Educational Assistance Payments (EAP): Includes all investment growth and grants in the account. These amounts are taxable when withdrawn.
It is an important step to reach out to your advisor or institution managing the RESP for this information to ensure you can plan accordingly.
Although a portion of the withdrawals are taxable, in most cases the student has limited income which keeps them in a lower tax bracket. In cases where the student is working throughout the year and earns more than the basic personal amount ($16,129 in 2025), some degree of planning can help save valuable tax dollars.
- Determining the number of hours the student plans to work during the year or if their program involves a paid co-op placement can be important when looking at how much to withdraw and when.
- Looking at the students’ plan to complete the program beyond four years or if they intend to pursue graduate studies.
- Utilizing available tax credits as an offset for the student’s income.
For some the issue is minimal, but for others proper planning can be the difference between paying tax and having to rely on student loans and scholarships.
If Your Child Doesn’t Attend Post-Secondary
In cases where a couple have multiple children, we always recommend opening a ‘Family RESP’. Lifetime contribution limits still apply but it becomes simpler to allow the account to be shared among siblings in the event one or more children do not opt to continue their education or find themselves unable.
In the event a beneficiary does not pursue post-secondary education, the government grant must be repaid (without interest). That said, parents can transfer up to $50,000 (per parent) of the RESP income to their own personal RRSPs, assuming they have the available contribution room, and the RESP has been open at least 10 years. If no RRSP room is available, the growth portion of the account (EAP) is withdrawn at the parent’s marginal tax rate, and a 20% penalty is applied. Alternatively, RESP funds can also be rolled into a Registered Disability Savings Plan (RDSP) for the same beneficiary.
- Note, the original amount contributed (PSE) can be withdrawn tax free.
RESPs can remain open for up to 35 years, giving families plenty of time to decide.
The Bottom Line
The RESP isn’t just a savings vehicle – it’s an opportunity to teach kids about the power of consistent saving and compounding growth. Combined with smart back to school budgeting, it can help families manage today’s expenses while building a strong foundation for their children’s future education.
Interested in determining how much you may be able to help your child or grandchild. Our My Estate Value Calculator can help: My Estate Value Calculator – TriDelta Private Wealth
If you would like to discuss ways in which TriDelta can help make the most of your RESP we encourage you to reach out for a free, no obligation review.
