“Rising cost of education is prompting parents to explore smart strategies for saving, budgeting, and supporting their children’s academic future.”

Let’s be honest, college and university aren’t affordable anymore. The expense of higher education has become one of the biggest financial challenges for families today.

But here’s the good news: with some planning and the right tools, you can save enough to give your kids the head start they deserve.

Tuition costs have been rising steadily over the years. In 2025, Canadian students pay approximately $7,734 per year in tuition, while American students face costs ranging from $10,000 to $40,000 annually, depending on whether the institution is public or private.

When you add housing, books, and meals, the average four-year university education in Canada now totals around $101,000, and that’s expected to rise.

By the time your child reaches college, tuition alone could be a small fortune. That’s why it’s never too early or too late to start saving.

The Rising Cost of Education: What Parents Can Do

Saving for higher education can feel overwhelming, but it’s all about taking small, steady steps. Here’s how to begin:

1. Start an Education Savings Account

In Canada, open a Registered Education Savings Plan (RESP). It’s an account that lets your money grow tax-free, and the government adds cash to what you put in.

In the U.S., open a 529 Plan, which allows you to invest after-tax dollars that also grow tax-free when used for education.

2. Automate Your Savings

Smart with as little as $25 a month in your RESP or 529 plan. Setting up automatic transfers makes saving effortless and builds consistency.

3. Let Time Work for You

With the rising cost of education, the earlier you start, the more time your money has to grow with compound interest. Even small amounts can make a big difference over 10-15 years.

4. Get Your Kids Involved

As your children grow, help them contribute part of their birthday money or wages from part-time jobs. It teaches responsibility and helps them build good money habits.

Government Benefits That Help You Save for Education

Both Canada and the U.S. offer incentives to make education savings easier.

For Canadians:

• Canada Education Savings Grant (CESG): The government adds 20% to the first $2,500 you contribute each year. That’s up to $500/year and $7,200 lifetime per child.
• Canada Learning Bond (CLB): For lower-income families, the government contributes up to $2,000 total, even if you don’t add your own money.
• Tax-Free Growth: Your RESP investments grow tax-free, and your contributions can continue until your child is 17.

For Americans:

• 529 Plan Benefits: These plans grow tax-free when used for qualifying education expenses. Some states even offer tax deductions or credits for contributions.
• Flexible Use: Funds can be used for college, K-12 tuition, or even trade schools, a big help if your child’s path doesn’t include a traditional degree.

Real-Life Example

Let’s say you open a RESP when your baby is born and put in $200 per month.

• Over the past 18 years, you have contributed $43,200.
• Add the government CESG (up to $7,200) and modest investment growth, and you could have $70,000 + by the time college rolls around.

That’s a huge relief when those first tuition bills come your way.

Example of a Late Starter

Let’s say you started saving when your child turned 10. You contribute $5,000 per year for seven years.

Since the CESG (Canada Education Savings Grant) allows for catch-up room, the government still matches 20% on contributions of up to $5,000 annually, providing a $1,000 CESG each year until reaching the lifetime cap of $7,200.

By the time your child is ready for college, you will have contributed $35,000, received $7,000 + in CESG, and built yourself a solid education fund in less than a decade.

 

 

Doable Ways to Boost Education Savings

• Put tax refunds, bonuses, or child tax benefits toward education savings.
• Gift contributions: Suggest grandparents contribute to your child’s RESP or 529 instead of toys that quickly lose value.
• Review yearly: Reevaluate your budget each year and boost contributions when possible; even small changes make a difference.

The cost of rising education will likely continue to increase, but preparation makes a difference. The earlier you start and the more you use government support, the less stressful those university years will be.

 

For Lower-Income Families: Extra Help from Ottawa

If your family’s income is below the government-set threshold, your child can receive the CLB.

• The additional CESG provides an extra 10-20% on the first $500 contributed, adding another $50-$100 each year.
• The CLB offers up to $2,000 in total, including an initial $500 just for opening the RESP. The good news is that you don’t have to contribute to your child’s RESP to qualify for the CLB. If your child is eligible, the government will deposit the specified amount into their RESP.

These programs ensure that every family can begin working toward postsecondary education, regardless of income.

How to Make It Happen: Step-by-Step Education Saving Plan

Here’s how to get started:

1. Open a RESP account.

You can do this at any bank, credit union, or investment firm. Even online platforms like Wealthsimple or Embark make it simple. You’ll need your child’s Social Insurance Number (SIN) to get started.

2. Set up automatic contributions.

To earn the full $500 CESG bonus, you need to contribute $2,500 per year. That’s about $208 per month.

If you can’t reach that amount right away, contributing whatever you can still helps you build savings, and you can always catch up later thanks to CESG.

Start small; even $50 a month adds up and still qualifies for grant money. The key is consistency.

3. Watch your money grow.

RESPs allow you to choose how to invest your contributions, from low-risk guaranteed investment certificates (GICs) to higher-growth mutual funds or ETFs. The longer your money stays in, the more it can grow.

4. Review yearly.

Revisit your RESP every year and adjust contributions as your budget allows.

Example:

Let’s say you have two children. You decide to contribute $2,000 each year for your two kids.

• With the basic CESG, each child gets $400 in grant money (20% of $2,000).
• After five years, that’s $10,000 contributed and $2,000 in grants, excluding investment growth.
• If your family’s income qualifies for the additional 10% CESG, you could get $450 per child per year, growing their education fund even faster.

The rising cost of education isn’t decreasing, but neither is your ability to prepare for it. Whether you start small or go big, every contribution makes a difference.

 

A RESP (Registered Education Savings Plan) is a government-supported savings plan designed for your child’s postsecondary education. Money you invest inside the RESP grows tax-free, and when it’s used for school, your child pays little to no tax when withdrawing it.

 

How the RESP Works

• Lifetime contribution limit: $50,000 per child.
• Plan to stay open for 35 years.
• Any family member can contribute.

When you add in the Canada Education Savings Grant (CESG), your savings get an instant boost.

Understanding The Canada Education Grant (CESG)

The government automatically adds 20% of the first $2,500 you contribute each year to your child’s RESP, up to $500 annually and a lifetime maximum of $7,200 per child.

Families with lower or middle income can earn even more:

Family Income	Extra % on first $500	Extra Amount	Max CESG per year
Less than $57,375	20%	$100	$600
$57,375 – $114,750	10%	$50	$550
More than $114,750			$500

 

The extra $50–$100 a year might not sound like much, but it compounds over time and adds up to hundreds of dollars by the time your child reaches 18.

 

Here is another plan so you can adapt:

Child’s Age	Monthly Contribution	Annual CESG Earned	Year-End Total (Assuming 4% Return)
0-5 years	$100	$240	~$6,600
6-10 years	$150	$360	~$15,000
11-15 years	$200	$480	~$30,000
16-17years	$250	$500	~$40,000+

 

Automate your RESP contributions, so you don’t need to worry. When you use RESP and CESG tools wisely, you’re not just saving money; you’re using government support for long-term growth.

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