I think that people who are wrestling with whether they should make RESP contributions, or do other things like pay down a mortgage, should know a bit about how RESP might affect future student loan grants but I haven’t found any information about this. I believe that *some* students might obtain more grant money, through the student loan program, if they have no RESP than they would obtain CESG and student loan grants if they have an RESP. I thought that you might have covered it in the book.

Here is the little bit that I do know. Federal student loan grants for low and medium income families are based 100% on family income (parental income) from the previous tax year. They would not be affected by RESP withdrawals. Provincial grants could be affected, where they are simply calculated on a % of eligible student loan. It is hard for a parent to do the calculations in advance because the provinces do not provide the formulas they use to assess student loan need. (When they apply the student provides a lot of numbers but it isn’t clear how they are used.) Some provinces provide their students with substantially more generous student grants and it is in these cases that having large RESP withdrawals could have a bigger impact on student loan grants.

I have previously tried asking Canada Student Loans some very general questions but they always reply that they need the student’s file number before they can answer. And obviously I don’t have a file number for a hypothetical future student. At this point what I would most like to know, and perhaps what Canada Student Loan would tell a journalist/ author, is whether it would be kosher for a student to make minimal EAP withdrawals (parental contributions) during their years of education and then to withdraw the rest after graduation.

Here is what I have figured out. With today’s available tax deductions for a student EAPs do not trigger income tax until the withdrawals push the students income above about $15,000 in a year that they have 4 months of classes or about $20,000 in a year that they have 8 months of classes. (The $20,000 will go up each year if the student has large education credits to carry forward from year to year.)

I suspect that most people with RESPs aren’t eligible for student grants which would explain the lack of interest in the topic.

If you are interesting in researching and writing an article on the topic, I’d be happy to post it.

For, example,

Is it possible that a student, who has a parent with average income, could profit just as much from the provincial and federal grants available when they apply for student loans as they would have if they had an RESP that had reaped the maximium CESGs? How about a student with low income parents?

What strategies are there for maximizing student loan grants when one does have an RESP? Withdraw all the EAP in the first year (spread over two tax years) and then apply for student loans in all the subsequent years?

I understand that all RESP withdrawals payable to the student are to be entered as parental contribution when a student is applying for a student loan. Does this also apply to withdrawals that may be made in the 6 month period after graduation? If not would it be a good strategy to have only small EAP withdrawals (that don’t jeopardize student loan grants) during the years of education and then sometime in the 6 months after graduation withdraw the balance and pay off the student loans? There might be tax implications for the student but might they be more than offset by the student loan grants that the student had received?

They have opened up three resp for them.

My concern is that we no longer get along and i dont be believe they will give the cesg money to the kids when they eventually start college.

In the meantime i have opened up a family resp plan for them. I need the cesg space to maximize my contributions every year.

I am worried that my parents are using up all the cesg grant room with their contributions that my kids may never see. I have no idea how much they are contributing at this time if anything. What can i do about this?

Thanks

Mike