RESP + OSAP: Maximize Your Child’s Education Fund with Free Government Grants

Written By Marco Canzoneri

By Marco Canzoneri | Making Better Cents | Licensed WFG Agent

 

A Smarter Way to Fund Your Child’s Future

What if you could help your child graduate without crushing student debt — and do it with free money from the government?

That’s not a gimmick. It’s one of the most powerful, underused strategies available to Canadian families. And if you’re not using it, you could be leaving thousands on the table.

I’m talking about the winning combination of the Registered Education Savings Plan (RESP) and the Ontario Student Assistance Program (OSAP). These two programs work together to fund your child’s future — whether they choose university, college, or skilled trades.

But here’s the catch: the earlier you start, the better it works.

Let’s break it down.

 

The Rising Cost of Education

Let’s face it — tuition, rent, books, food… everything’s getting more expensive. Supporting even one child through post-secondary education is a major financial commitment. Two or more? It can feel overwhelming.

That’s why starting early and using every tool the government offers isn’t just smart — it’s necessary.

 

What’s an RESP?

A Registered Education Savings Plan (RESP) is a special account designed to help families save for their child’s education. And it comes with a major bonus: the government chips in.

When you contribute up to $2,500 per year, the federal government adds 20% through the Canada Education Savings Grant (CESG) — that’s an extra $500 annually, per child. Over time, those grants add up.

Even better, families with modest incomes may qualify for the Canada Learning Bond (CLB) — up to $2,000 with no personal contributions required.

That’s free money — and too many families leave it unclaimed.

 

A Tax Win for Families

Not only are you getting government contributions, but the RESP also grows tax-free. The investment income inside the account isn’t taxed while it grows, and when it’s eventually withdrawn, it’s taxed in your child’s name — not yours.

Because most students have little to no income while in school, the tax payable on RESP withdrawals is typically very low — or even zero. Your own contributions come out tax-free, and only the grants and investment growth are taxed in your child’s low-income bracket.

More money for school, less going to the CRA.

 

More Than Just Tuition

An RESP isn’t limited to traditional university tuition. It can be used for a wide range of post-secondary education costs, including:

·       College and university programs

·       Trade school and apprenticeships

·       Online learning (if accredited)

·       Books, tools, rent, groceries, and transportation

If your child is enrolled in an OSAP-approved program, the RESP can help cover almost everything they’ll need.

 

RESP + OSAP: Working Together, Not Against Each Other

One of the biggest myths I hear from parents is that saving in an RESP will hurt their child’s eligibility for OSAP. Let me clear that up: it won’t.

The Ontario Student Assistance Program (OSAP) only considers the grants and investment growth inside the RESP — not your original contributions. And the system is designed to prioritize RESP withdrawals first. OSAP then steps in to fill the gap with grants and loans.

In other words, OSAP doesn’t punish families for saving. It simply ensures that the lowest-cost funding (RESP grants and growth) is used first, before relying on borrowed money.

 

A Real-World Example: Two Children, One Plan

Let’s say a couple opens a Family RESP when their first child is six months old. They decide to contribute $208.33 per month — $2,500 annually — which triggers the full $500 CESG grant.

Three years later, they have a second child. At that point, they double their monthly contribution to $416.66 so that both children receive the full CESG annually. The government now contributes $1,000 per year ($500 per child).

Assuming a modest 6% average return, by the time their first child turns 18, the RESP has grown to approximately $80,000–$85,000. This includes around $36,000 in total contributions, up to $14,400 in grants, and $30,000–$35,000 in investment growth.

Child 1 goes off to university. Over four years, tuition and living expenses total about $50,000–$60,000. They withdraw $50,000 from the RESP to cover a significant portion of these costs.

 

Continued Growth for Child 2

When Child 1 begins withdrawing their portion, Child 2 is 15. That leaves about $30,000–$35,000 in the RESP — and those funds remain invested and untouched for three more years.

With steady growth, the remaining balance climbs to around $38,000–$42,000 by the time Child 2 turns 18. Now, they can use the remaining RESP funds for college, university, trades, or any other OSAP-approved program — and apply for OSAP if additional support is needed.

 

Summary Strategy: Simple, Powerful, and Flexible

If you want this to work for your family, here’s the basic plan:

·       Start your RESP as early as possible — time is your best ally

·       Contribute $2,500 per child each year to unlock the full $500 CESG

·       Set up monthly contributions to stay consistent

·       Let the investments grow over the long term

·       Use RESP funds first, then use OSAP to top up any gaps

·       You don’t need to be perfect — just consistent

The result? Roughly $72,000 in contributions can grow to $80,000–$85,000, while supporting two children’s education and reducing future debt.

 

Mistakes That Could Cost You

In my experience, these are the most common — and costly — mistakes families make:

·       Waiting too long to start and missing early grant opportunities

·       Skipping contributions and leaving CESG money on the table

·       Underestimating how much school really costs

·       Not understanding how RESP withdrawals affect OSAP eligibility

You don’t need to master the whole system — but having a smart plan early can save you thousands down the line.

 

The Bottom Line

Education is one of the greatest investments you can make for your child — but it doesn’t have to bury them in debt. With a smart strategy using the RESP and OSAP together, you can give your children a strong financial foundation and peace of mind.

You don’t need to be perfect. You just need to be prepared.

 

Want Help Creating a Plan?

If you’re ready to open an RESP or just want to explore your options, I’d be happy to help you map it out.

Let’s give your children a future they won’t have to pay off for decades.

I’m Marco Canzoneri, licensed agent with World Financial Group and founder of Making Better Cents. I help Canadian families build clear, simple strategies that take advantage of every opportunity the government provides.

📧 Email me marco@makingbettercents.com 


📱 Follow @MakingBetterCents on Facebook or www.MakingBetterCents.com

 

📚 Helpful Resources

Here are a few official links if you’d like to learn more or verify anything I mentioned:

Marco Canzoneri