How to get Free Money for your RESP

Free money alert and no, there’s no catch here.  Thanks to an initiative taken by the Government of Canada in 2022, the Employment and Social Development Canada (ESDC) is now providing the Canada Learning Bond (CLB) to students aged between 18- 21 years. 

To put it simply,  the CLB is a lump sum of money that the Canadian Government will deposit into a Registered Education Savings Plan (RESP). This benefit was designed to help low to modest-income families help pay for their child’s post-secondary education. The best part of the incentive is that no personal contributions to an RESP are required to receive the CLB.

And what’s wild about it, is no one is using it. According to the 2020 Annual Statistical Review by Canada Education Savings Program (CESP), 3.8 million children were eligible for the CLB but only 42% actually applied and received it. 

So that’s that. But, how much can you actually expect from the CLB? Well, here’s the high-level breakdown. 

Right after you open an RESP (yes, you NEED to have an RESP and it’s okay if you don’t have any prior deposits in there yet), you get $500 for the first year and $25 to help cover the costs of opening the account. Afterwards, you’ll receive $100 for each year that your child is eligible – until they turn 15 years old – making the lifetime total to be $2,000 per child. 

Now that the monetary aspect is clear, let’s look into the eligibility criteria. Your child is eligible for CLB if 

  1. Your child was born no earlier than 2004.
  2. You have the required documents: Both of your SINs, Birth Certificates and PR cards (if not a Canadian citizen)
  3. Your family’s net income meets the income threshold set by the government.

For the July 1, 2021, to June 30, 2022, benefit year, adjusted net income for CLB eligibility is as follows:

Number of ChildrenAdjusted Net Family Income
1 to 3Less than or equal to $49,020
4Less than $55,311
5Less than $61,626
6Less than $67,942

Families with more than 6 kids, please check the detailed criteria.  

Hold up. What if you’re 18 and yet to figure this out? Fear not, ‘cause you still have right up until the day you turn 21 to open an RESP for yourself and apply for the CLB.  Just so you know, CLB’s also applicable to children in care for whom a Children’s Special Allowance is payable. In that case, the primary caregiver is required to request the CLB on the child’s behalf. 

Okay, since the ‘What’ and the ‘Who’ is out of the way, time to get to the ‘How’. It’s a super simple, 2-Step process. 

Step 1: Collect the SINs for the child and the subscriber (even if they are not the primary caregiver) or the Business Number of the agency if the child is in care. 

Step 2: Immediately open an RESP with a participating RESP promoter. Psst, it’s not mandatory to have a bank account for that. If you have an RESP but are yet to receive the CLB, contact your RESP promoter asap. 

That’s it, once your application is approved, the CLB will be deposited in your RESP for every year that your child is eligible. If you want to learn more about the RESP, check out this comprehensive guide to RESP

In the end, all it takes is a little bit of smart planning to make your kid’s post-secondary education more affordable. 

Just imagine what the amount from your RESP contributions and the CLB combined with the payd savings can grow into. 

 

 

 

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