How to plan and save for your Children’s Education: RESP, TFSA, Whole life insurance

How do you know where to get started? The first step is to do your homework and figure out how much college or university might cost. 

according to Statistics Canada, full-time graduate students paid, on average, 7000 to 12000 per academic year, whereas undergraduate students paid $6000 to 7000. Of course, tuition costs can very widely by school, discipline, and even location. For example, undergraduates in Nova Scotia had the highest tuition fees higher than the Canadian average. And undergraduates in a professional degree program pay the highest average tuition fees  compared to other degree programs. 

What’s an RESP? 

An RESP is a Registered Education Savings Plan, which is a plan that lets your investments grow with taxes deferred until your child starts withdrawing money to pay for post-secondary education.

RESPs are a popular option for parents and grandparents. The subscriber (or contributor) makes contributions on behalf of a beneficiary (the child). The growth is tax-deferred until withdrawals are made, at which time it can be taxed in the beneficiary’s hands if the beneficiary enrolls in a qualifying post-secondary educational program. 

Contributions to a child’s RESP  qualify for the Canada Education Savings Grant (CESG) if your child is under the age of 18. CESG boosts your annual contributions by 20%, up to a maximum grant of $500 per year (or a maximum of $1,000 if there’s unused grant room from a previous year) to a lifetime limit of $7,200.  

If your family’s income is below certain amounts, you may also qualify for the Canada Learning Bond.

However, RESPs have a lifetime contribution limit of $50,000 and the CESG and investment growth must generally be used to pay for qualifying educational programs. 

The government gives the plan a basic grant of 20% on the first $2,500 of annual contributions to an RESP. That’s up to $500 per beneficiary each year to a lifetime limit of $7,200 towards a child’s education.

What’s the difference between a TFSA and an RESP? 

A TFSA allows you to contribute up to $7,000 a year (that’s the limit for 2026), get tax-free investment growth, and withdraw your money for any purpose, not just for qualifying educational programs like an RESP. 

For children under age 18, RESPs are the preferred savings vehicle because of the age limit for the CESG. Once your child is over age 18 and the CESG no longer applies, they may want to consider their own TFSA or other options.

What if the plan changes?

A lot can happen between age 3 and 18. As your children grow up and start to consider (more realistic) career options, you can reassess your plan and your savings strategy. 

If it looks like your child could pursue an expensive degree or go to school in a more expensive location, consider doubling down on RESP savings while you can still take advantage of the CESG. 

If your child may not attend college or university, emphasize TFSAs and nonregistered savings options because they’re more flexible. 

Whole life insurance

 Whole life insurance cash value for child education builds tax-deferred savings through premium payments and dividends, allowing parents to accumulate funds over many years. This cash value can be withdrawn, borrowed against tax-free, or used as collateral to pay for tuition and expenses, often transferred to the child at age 18 or older to the child without incurring any tax consequences

How It Works for Education Costs

• Tax-Deferred Growth: A portion of the premium goes into a cash value account, which grows on a tax-deferred basis.
• Accessing Funds: Once the child is older, you can withdraw funds or take a policy loan against the cash value to pay for education costs.
• Dividend Potential: Participating whole life policies may pay dividends, which can increase the cash value or be used to pay premiums.
• Ownership Transfer: Policies can often be transferred to the child tax-free when they reach the age of majority, giving them access to the asset for tuition, a home down payment, wedding, or other needs.
• Payment Options: can be paid up in 8, 10, 20yrs and coverage last for life time and continue grow tax deferred.

Get guidance 

Successfully saving and helping your kids pay for college or university requires a plan. 

Once you figure out the goal, and we can work together to meet and put the plan in motion. 

As you talk and plan with your children on their future, consider consulting with us who can recommend additional strategies to maximize your education savings, build flexibility into your plan, and help your children fulfill their career dreams even if their plans change changes in the future..