The Education Plan

THE EDUCATION PLAN

Tuition, Solved By The Time They Are Eighteen

A structured approach to funding a Canadian child's post-secondary education, using every advantage available.

SUCCESS RATE

0 %

The Problem

Post-secondary education in Canada is one of the most predictable large expenses a family will ever face, and one of the most commonly underfunded. A four-year undergraduate degree at a Canadian university, including tuition, books, residence, and reasonable living costs, currently runs between eighty thousand and one hundred and twenty thousand dollars per child. A professional degree such as medicine, law, or dentistry can run substantially higher. By the time the child the funding is meant for turns eighteen, the cost will be higher again.

The good news is that Canadian families have access to a structurally generous savings framework for education in the form of the Registered Education Savings Plan, supplemented by federal and provincial grants that can add tens of thousands of dollars to a child's education fund for free. The less good news is that most families who open an RESP do not optimise the contributions, do not claim the full available grants, and do not coordinate the RESP with the other instruments available to them. The result is a partially-funded education and a parent who supplements the gap through borrowing or through drawdown of retirement savings.

The Scenario

Consider a family with one newborn child. The family can commit approximately two hundred and ten dollars per month, or twenty-five hundred dollars per year, to education savings. The Education Plan organises this contribution to capture the full Canada Education Savings Grant (CESG), which adds twenty percent on the first twenty-five hundred dollars contributed each year, up to a lifetime maximum of seventy-two hundred dollars per child. For families with lower household income, an additional CESG of ten to twenty percent on the first five hundred dollars annually is available, and the Canada Learning Bond may be available regardless of contributions.

Over eighteen years, with consistent contribution and grant capture, a single child's RESP can accumulate well over one hundred thousand dollars. For families with greater contribution capacity, or for families starting earlier with multiple children, the available funding is meaningfully larger.

The Instrument

The Education Plan uses three instruments in coordination.

The Registered Education Savings Plan (RESP) is the core. The RESP grows tax-deferred, captures CESG and provincial grants, and is structured to release funds to the child as Educational Assistance Payments during their post-secondary studies, taxed in the child's hands where the tax rate is typically nominal. Aevum advises on whether a Family Plan RESP (one plan, multiple children) or Individual Plan is appropriate, and on the contribution sequencing required to maximise grants across the eighteen-year window.

The Tax-Free Savings Account (TFSA), where contribution room is available, serves as a complementary education savings instrument. Unlike the RESP, the TFSA does not attract grant matching, but it has no restrictions on how the funds are eventually used. A TFSA-for-education strategy is particularly relevant for families whose RESP contributions are maxed and who want additional education savings capacity, and for grandparents who want to contribute toward a grandchild's education without ceding control of the assets.

Permanent life insurance on the parent or grandparent, where appropriate, serves as the protection layer. In the event of the parent's premature death before the child reaches eighteen, the death benefit funds the remaining education obligation in full, ensuring the plan does not collapse with the parent.

The Mechanism

The Plan works in three coordinated layers. The first is the structured monthly RESP contribution, sized to capture the full annual CESG match. The second is the staged top-up using TFSA or other available savings vehicles, deployed when RESP contribution room is exhausted or when the family wants additional flexibility on how the funds are eventually used. The third is the protection layer, sized so that in the event of the contributing parent's death, the death benefit fully replaces the remaining contribution obligation through to the child's post-secondary completion.

This three-layer approach is the difference between a partially-funded education and a fully-funded one. Most Canadian families have at least one of the three layers in some form. Few have all three coordinated.

The Comparison

A reasonable question from parents who have looked into education savings is whether an informal trust, sometimes called an in-trust-for account, is a better option than an RESP. The answer is almost always no. An informal trust lacks the grant matching that gives the RESP its structural advantage, has more complex tax treatment with attribution of income back to the contributing parent, and provides no enforceable mechanism for the funds to be used for education. The RESP, despite its restrictions, is the more efficient instrument for the overwhelming majority of families. There are narrow situations where an in-trust account makes sense, typically for funding that is not earmarked for education or for families that have fully exhausted RESP contribution room. We will tell you honestly which applies in your situation.

The Legacy

Education funding is the most direct intergenerational transfer most families will ever make. The Education Plan ensures that transfer is structurally optimised, fully protected, and delivered to the child at the moment it is needed without compromising the parent's own financial position. The child completes their education debt-free. The parent retains the ability to use post-education savings capacity for retirement planning. The plan ends at age eighteen, having done what it was built to do.

The Next Step

A first conversation about the Education Plan covers your current RESP position if any, your contribution capacity, the number and ages of the children you are funding for, and whether a permanent life insurance protection layer is appropriate for your circumstances. It is a complimentary thirty-minute meeting, virtual or in person.