• Private Schools
• Advice Guide
• Paying for School

“The best thing to do is start putting money aside as soon as possible,” says Carrie Tuck, director of marketing for Elliott & Page, a Toronto-based mutual fund company. Consistent, early saving allows your investment to grow over time, making education costs more manageable.

Affording a private education can involve several options, from financial assistance and bursaries to smart investing strategies started as early as the preschool years. Private school tuition can range from a few thousand dollars per year to more than $30,000 for boarding schools—and that may not include other costs like uniforms, books, field trips, and meals.

How much should families budget for future education costs?

Private school tuition is only one part of the long-term financial picture. Most private schools have high university acceptance rates, meaning families should also plan for post-secondary education. Four years of university can cost anywhere from $50,000 to $150,000, depending on the program and location. Starting a plan early can greatly reduce the financial burden later on.

“The longer you save money, the larger the nest egg will be,” says Tuck. “The benefits of a longer time frame include compounding interest and dollar-cost averaging—it’s better to purchase more units over time than all at once.”

What is a Registered Education Savings Plan (RESP)?

One of the most effective and popular tools for education planning is the Registered Education Savings Plan (RESP). Similar to an RRSP, the RESP’s performance depends on the investment choices you make and your comfort with risk. Parents can adjust investment strategies over time as their child approaches post-secondary age.

The RESP allows Canadians to contribute up to $4,000 annually per child, with a lifetime limit of $42,000. The funds must be used within 25 years. Contributions are not tax-deductible, but all growth within the plan is tax-free until withdrawal.

What is the Canada Education Savings Grant (CESG)?

To encourage savings, the federal government offers the Canada Education Savings Grant (CESG). For the first $2,000 contributed each year, the government adds 20%—up to $400 annually. Over 18 years, parents who contribute $2,000 per year can receive up to $7,200 in grant money, completely tax-free.

“The RESP has no foreign investment restrictions, so you can invest globally,” notes Tuck. “Given that international funds often outperform Canadian ones, this can benefit investors.” Elliott & Page offers 22 mutual funds and an RESP with no administrative fees.

What happens if my child doesn’t attend post-secondary school?

There are conditions to be aware of. If no beneficiary enrolls full-time in post-secondary education by age 21, the CESG funds must be returned to the government. However, you can withdraw your original contributions. If the plan has been open for at least 10 years and the child is 21 or older, up to $50,000 can be transferred tax-free to your RRSP or your spouse’s plan. Any untransferred funds become taxable income.

Are there alternatives to RESPs for education savings?

If you’re unsure whether your child will pursue post-secondary education, other options—such as trust funds or mutual funds—can provide more flexibility.

How do education trust funds work?

Setting up a trust fund is another way to save for education. There are two types: formal and informal. Gary and Michelle Williams of Burlington, Ontario, chose an informal trust fund for their son Lucas when he was just five months old.

Informal trust funds are ideal for smaller contributions and can be opened through most banks without a lawyer. Taxes are paid on income and dividends, but these accounts usually carry no administrative fees. “We wanted to keep more control over how and when the money is used,” says Gary. “This way, we can guide him if he wants to start a business or invest in the future.”

When an informal trust is cashed out, the recipient pays capital gains tax and gains full control of the money at age 18. The funds are non-transferable.

Formal trust funds, on the other hand, are suited for larger amounts (typically over $50,000) and are legally established with the help of a lawyer. They often include stipulations on how and when the funds can be used, and both income and dividends are taxed annually.

Can mutual funds be used for education savings?

Another popular option is mutual funds, which provide flexibility and control. These accounts are usually opened in a parent’s name, but children can also have their own if they have a Social Insurance Number. Mutual funds allow families to adjust investment strategies over time and access funds when needed.

“A non-registered account is a lot easier to manage,” says Tuck. “The downside is you pay tax every year.” Dividends, interest income, and capital gains are all taxed in the contributor’s name.

When is the best time to start saving for education?

The best advice is simple: start early. Determine how many years you have before your child enters university or college, and how much you want to save. Then, estimate how much to set aside each month based on your expected rate of return—typically around 8% annually.

Whether you choose an RESP, a trust fund, or mutual funds, starting sooner allows your savings to grow steadily and gives your child the freedom to pursue educational opportunities with confidence.