RESP: Registered Education Savings Plan
CESG: Canada Education Savings Grant
CLB: Canada Learning Bond
SIN: Social Insurance Number
1. Who is eligible for the Canada Learning Bond?
Your child can get the Canada Learning Bond if:
Your child was born after December 31, 2003, and
You receive the National Child Benefit Supplement as part of the Canada Child Tax Benefit, commonly known as “family allowance”.
2. How much money could my child get from the Bond?
Through a Registered Education Savings Plan (RESP) you could get $500 now to help you start saving early for your child’s education after high school. Your child may also get an extra $100 each year up to age 15, as long as you continue to receive the National Child Benefit Supplement. That’s up to $2,000 in Canada Learning Bonds (plus interest) for your child’s education. An extra $25 will be paid to help cover the cost of opening an RESP.
3. How does the government know when and where to deposit the Canada Learning Bond (CLB) and the Canada Education Savings Grant (CESG)?
When families open an RESP at their financial institution they should make sure they complete the application for the Canada Learning Bond and the Basic and Additional CESG at the same time. It’s the RESP provider’s (financial institution) responsibility to submit all required documentation to the government. The government will verify the family’s eligibility and forward any grants to the RESP account. Income eligibility for grants is re-checked each year. The government commits to deposit the Canada Learning Bond and any CESG directly into the RESP account within 65 days of receiving the application so parents should check their statements to make sure the grants are deposited. If they don’t see them on their statements, parents should contact their RESP provider to make sure all documentation has been sent to the government. If it’s been sent, but there’s a delay, parents can call the Canada Education Savings Program Hotline at 888-276-3624 to check on status.
4. What if a financial institution tells a family that they have to make a contribution to get the CLB?
Some financial institutions only open RESPs with a minimum contribution. But even in those institutions, like the major banks, where no contribution is required to open an RESP a lot of branch staff are not aware of the fact or familiar with the Canada Learning Bond. Make sure the parents you talk to are armed with information. Give them appropriate materials like the banks’ own flyers. This will help them talk to their RESP provider and help educate branch staff at the same time.
5. How does a financial institution pay out RESP funds when the child is ready to go to school?
The RESP is made up of two parts:
a. the family’s own contributions; and
b. the government’s contributions (the Canada Learning Bond and Canada Education Savings Grants) and any income generated in the account.
Once a child is enrolled in a qualifying educational program, the RESP’s subscriber (the person who opened the RESP – typically the parent) can withdraw any family contributions in the RESP tax-free and without impacting any grants they received. The subscriber can also ask that the child be issued an Educational Assistance Payment (from the government’s contributions and income in the account). The subscriber will be asked to provide proof of the child’s enrollment in a qualifying program. Note: Some RESP providers restrict when subscribers can request payments and the type of educational programs that qualify. Families should check for restrictions before they start an RESP or contact their RESP provider for more information.
6. How and when can a parent get their contributions out of an RESP?
Families can withdraw their own contributions from an RESP at any time, but any CESG grants that matched those contributions will be returned to the government. The Canada Learning Bond is not affected by a withdrawal. Note: While some RESPs charge no fees, others charge enrolment fees that are deducted from a family’s contributions (and are paid back in part or in full for the child’s education). A family that withdraws early from a plan with enrolment fees may not get all of their contributions back. Families should learn about any fees before they start an RESP or contact their RESP provider for more information.
7. Can someone with refugee status get the CLB?
As long as both a parent and their child have Social Insurance Numbers (SIN), they can start an RESP to receive the CLB. This includes individuals with temporary Social Insurance Numbers that begin with a “9”, issued to temporary workers who are not yet Canadian citizens or permanent residents, including refugee claimants, foreign workers and foreign students. If a parent’s temporary social insurance number is not renewed, the parent can withdraw their own contributions from the RESP, but any federal grants (Canada Education Savings Grants, Canada Learning Bond) will be returned to the government.
8. What if a family is not eligible for the CLB now, but was eligible a couple of years ago?
A child’s entitlement to the Canada Learning Bond is tracked and is paid out retroactively once an RESP is opened. If a family is not eligible now, but has been in the past – or may be in the future – then they should open an RESP and apply for the Canada Learning Bond.
9. How does a family change their Registered Education Savings Plan (RESP) provider?
If a family decides to transfer their RESP from one provider to another they should start by opening an RESP account with their new provider and asking them to start the transfer application. Many RESP providers charge a fee to transfer an account to another provider.
10. How does a family choose the right provider for the best return on their investment?
An RESP is an important investment in a child’s future so first, a family should choose a provider they trust and feel comfortable dealing with. Every parent’s investment knowledge and tolerance for risk is different. Since different RESP providers offer different investment options from Guaranteed Investment Certificates (GICs) to fully self-directed investing, a family should decide what types of investment options they want to have and choose a provider that suits their needs. Families should remember that any fees that a provider charges will reduce overall returns. Any contributions a family is able to make can attract CESG matching grants (up to a maximum of $7,200 in grants per child). The CLB adds even more for eligible children. These grants by themselves represent a significant return on investment that no family should miss.
11. What’s the difference between a Group Plan and an Individual or Family Plan?
Group plans are intended for families that want a consistent savings program and can continue regular saving until their child is ready for post-secondary education. Families who are in a position to commit to a disciplined savings schedule (for instance, monthly contributions) may wish to participate in a group RESP. However, not every family is able to commit to a regular savings schedule. Families who don’t want to or can’t contribute to an RESP regularly may prefer an individual or family plan that allows for more flexible savings.
12. What if someone already has an RESP but doesn’t know if they’re getting the CLB?
If the family meets the eligibility criteria for the CLB, ask them to check their RESP account statement. It should show what grants the family is receiving. If it doesn’t look like the family is receiving all the grants they should, or if the family doesn’t have a statement, encourage them to contact their provider or call the Canada Education Savings Program Hotline at 888-276-3624 to check their account. Note: An education savings plan cannot be registered as an RESP unless the family has provided Social Insurance Numbers for both the parent and child. A child will not receive any government grants they’re entitled to if the plan is not registered.
13. How can I find out what RESP provider a family is using if they have forgotten?
Encourage the parent to call the Canada Education Savings Program Hotline at 1-888-276-3624 to discuss their RESP account with a federal government representative. They will need to provide their own and their child’s Social Insurance Numbers to access information.
14. How can I help a family that’s finding it difficult to make required monthly contributions to their RESP?
If a family committed to making monthly RESP contributions and can no longer do that, they should contact their RESP provider immediately. Depending on the provider and the plan, there may be different options to stop regular contributions. In an individual or family plan, they may be able to just stop and re-start again in the future. In a group plan, they may be able to suspend contributions for a while, reduce the number of units they’re purchasing or switch to a more flexible individual or family plan. What they shouldn’t do: Stop payment, cancel the plan or transfer the plan until they’ve talked to their provider to discuss all of their options. Any of these actions could cost the family more in fees or cause them to lose contributions or grants.
15. Given that students in Ontario will be receiving free tuition for households making $50,000 and under, is the Canada Learning Bond still necessary?
There are four reasons why the Canada Learning Bond is still a very necessary compliment to the Province of Ontario’s revamped Student Aid program. The program is fantastic but it falls far short of the actual costs of post secondary education, university, especially.
1) First off the province itself warns parents that the program is based on average tuition and in many cases schools and particular programs at schools tuition (ie: Engineering, Business etc)will be greater than the average so the difference would have to made up either by another program which the child may or may not qualify for… so its a good idea to have savings to make up the difference. The average tuition in Ontario has gone up since the benchmark was set and there is no word whether this program is indexed, so having extra takes the worry out of that issue.
2) Second, the province also very clearly warns that parents will still need at least $3,000 a year during post secondary for typical additional expenses. These can vary greatly and include things like books, other supplies including laptops etc, travel, living expenses and others. in fact this can run far beyond $3,000 if a student wants to go to a school away from home. Also, the Ontario program will pay for education anywhere within Canada but not outside Canada!
3) Third, If your child is 9 years old today, what will your income be when your child is 18? Will you still be eligible or, will you be above the cutoff? With tuition and expenses expected to be above $20,000 a year at universities and above $10,000 at colleges? Building assets are critical to preparing for an unknown future.
4) And we think this is MOST important especially for community service groups and family support organizations is the CLB’s value as a community building tool… a tool to fight poverty:
Free Tuition does nothing to motivate students to finish high school in the first place. Whereas, gradually building education savings has been shown to greatly enhance a student’s efforts and greatly improves their likelihood of graduating from secondary school. Three times more likely to graduate from High School and four times more like to complete some form of post secondary program.
16. Where can I find out more about the Canada Learning Bond?
Visit your local Service Canada Centre