Let’s take a look at how low-income Canadian families can save for their children’s education by taking advantage of the Canada Learning Bond (CLB). Many Canadians don’t know about the CLB, and it’s a great way for eligible families to maximize their child’s RESP!
The CLB is money that the government will give to the RESP of an eligible child. That’s right, free money! You don’t personally need to contribute anything to your child’s RESP to receive the grant, you simply need to have opened an RESP for your child.
Money in your child’s RESP can be used to pay for full-time or part-time apprenticeship programs, trade schools, colleges, or universities after high school. If your child decides not to continue with post-secondary education, any money you’ve personally contributed to their RESP will be returned to you and any CLB money will be returned to the government (the CLB can’t be transferred to a sibling, it’s child specific).
Remember that an RESP can stay open until the end of it’s 35th year, so if you open an RESP for your five year old they have roughly until they’re 40 to use all the money in their account.
The government contributes up to $2,000 in total to an RESP for an eligible child. They’ll contribute $500 the first year your child is eligible, and $100 each year after that your child remains eligible (up until and including the year they turn 15).
The government will look at your family income each year to determine if you’re eligible or not. It’s entirely possible that one year you’ll be eligible, the next you won’t, and the next you will so continue applying even if you didn’t get it last year.
Children born on or after January 1, 2004, who are Canadian residents with a valid SIN, who have an RESP in their name, and who are from what’s deemed a low-income family.
Income eligibility depends on the number of children in your family and your adjusted net family income (that’s the income of the primary caregiver and any cohabiting spouse or common-law partner). There’s a chart on the CRA website that details income eligibility, but for example, a family with 1 to 3 children and an adjusted net family income of $46,605 or less in 2018 would be eligible.
The primary caregiver (or their spouse or common-law partner) applies on behalf of the child. To apply, you’ll need your child’s SIN number and an open RESP to put the funds into.
If your child doesn’t qualify for the bond when you open the RESP, you can always apply later if your family income has changed.
You have up until your child is 21 to apply for the grant, and it’s retroactive which means that you’ll receive the full amount your child was entitled to in any previous eligible years. While this is great, you’ll want to apply as early as possible so that the grant money has lots of time to grow in an RESP. It’s one of those the sooner you start the better situations, so don’t wait to apply!
If you have more questions about the CLB or saving for your child’s education in general, be sure to bring it up with your Plan Pro when you’re having a call with them. We’re always happy to help.