Why Should I Get An RESP Loan?

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Danika Dickson

Do you have a registered education savings plan (RESP)? An RESP is an smart way to invest in a child’s future education. The money in an RESP can help them with their studies by offsetting the costs of tuition, books and more. But not everyone is able to start when their kids are young. Maybe you didn’t start early on or weren’t able to contribute as much as you would have liked. In that case, an RESP loan may help you catch up. In this post we’ll share how RESP loans work and why they might help your family.

The RESP: Investing for your children’s future education


Because we are parents ourselves, we truly value kids education. We want to help families support their educational goals. Education planning is one part of ensuring our child’s financial future and wellness.

Many people open RESPs when their children or grandchildren are young so their contributions can grow tax-free. They can also benefit from government grant programs that help kids’ post-secondary education.

Did you know that you may put up to $2,500 a year into an RESP per kid? So if you are planning for 2 kids and want to maximize RESPs, you can put $5,000 per year into an RESP ($416 per month). It can be hard to maximize monthly contributions when kids are very little. Is anyone thinking about how expensive diapers are and how much daycare costs?

With an RESP Loan, you can maximize your RESP contributions without changing your budget.


With the RESP Loan, you can maximize how much goes into the fund.

The RESP Loan can help you save more money for your child’s RESP. You get the most of the potential government grants this way.

An RESP Loan is simple: You put the money you give and the money you borrow into your RESP. Together, your money plus the loan helps you receive government grants. The more you put in your RESPs, the more grants you get (up to the maximum). The grants will grow the amount in your RESP.


Build More Savings

If you haven’t started an RESP yet, or you spend less than $208 each month on the RESP, you are likely missing out on some grant money. Why not make the most of ‘free money’ for your child?

Depending on which province you live in and how much money you spend, you can get up to $10,800 in canadian and provincial grants! With an RESP loan, you can borrow some of the money to take advantage of this. When your child is ready to graduate high school, they can focus on learning and their career goals, without worrying about how to pay for it.


Get Government Grants from Past Years

An RESP loan gives you a chance to get back unused government grants from past years. You can double the grants you get without spending any additional money

The total money earned in your RESP is higher because the extra amounts from the loan and the government grants invested within your RESP.


What will happen when my youngster is ready to start their post-secondary education?


Parents & Grandparents

When your child is ready for post-secondary education, you will get back to you what you saved in a RESP and you’ll pay back the amount of the loan and interest. You can use a portion of the recovered contributions to repay the loan interest.

More money for your child

Your child will receive the grants and the investment money that built up in the RESP. This came from you contributions that were paid by family, the government grants and the money earned because of the loan. This total amount is much higher than if no RESP loan was taken.


There is no cost to talking with a broker to review your current RESP plan and make recommendations. You will know more and understand all your options, and can make an informed choice about what, if anything, you wish to change.



Learn More About RESP Loans

There is no cost to having a conversation and getting more information. Learn more about an RESP loan from an independent advisor that can make sure you get the most from an RESP.

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