Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.

How to save for college or university

Tuition costs are always on the rise — find out how to make your money go further.

The cost of attending a public community college for one academic year in your own province runs around $2,000-$5,000, while attending a public university could set you back roughly $5,000-$8,000 a year. And that’s just tuition alone — there’s also room and board, food, transportation, books, supplies and a myriad of other costs to consider.

Student aid and scholarships can help pay for your education, but there are still loads of outstanding expenses. Here are some of the best ways to stockpile funds for post-secondary education.

Registered Education Savings Plans (RESPs)

A Registered Education Savings Plan (RESP) is a long-term investment account that lets people (usually parents and grandparents) save up to $50,000.00 for a child’s education. Money deposited into an RESP grows in 2 (or possibly 3) ways:

  • Funds are put towards either fixed investments (i.e. short-term bonds, GICs and investment savings account) or equity investments (i.e. stocks and mutual funds). Interest earned on these investments is not taxed.
  • Through the Canada Education Savings Grant (CESG), the federal government matches annual RESP contributions by 20% if the the future students receiving the funds are 17 or younger. The CESG applies on the first $2,500.00 of annual contributions (or $5,000.00, if unused contribution room from previous years is carried forward) up to a lifetime limit of $7,200.00.
  • Through the Canada Learning Bond (CLB) program, children from low-income families will get up to $2,000.00 in RESP contributions from the federal government. This is not a matching program – no personal contributions are necessary to get the CLB.

Contributions to an RESP are not tax deductible. Withdrawals from an RESP for educational purposes are called educational assistance payments (EAPs) and count as part of the student’s annual taxable income. Should funds go unused and get returned to the contributor, he or she can receive the funds without paying additional tax.

Compare RESP Accounts

Name Product Minimum Deposit Funding Methods Management Fee Available Asset Types
Justwealth RESP
Direct deposit, Bank transfer, Automatic bank withdrawals
Receive a cash bonus of $50.00-$500.00 when you open a new Justwealth RESP account.

Compare up to 4 providers

Early RRSP withdrawals under the Lifelong Learning Plan

A Registered Retirement Savings Plan (RRSP) is very similar to an RESP in that it’s a long-term investment account designed to save for the future – in this case, old age. Again, similar to an RESP, money can grow tax free, but withdrawals are taxable. However, one crucial difference between the 2 types of accounts is that contributions to an RRSP are tax deductible.

Because RRSPs are designed to help people save for retirement, withdrawals before you reach 71 years old are heavily taxed. But there are 2 circumstances in which you can withdraw from an RRSP prematurely: to buy or build a home (under the Home Buyers’ Plan) and to help fund your education (under the Lifelong Learning Plan).

Under the Lifelong Learning Plan (LLP), you can take up to a certain amount out of your RRSP yearly to pay for full-time training or education at a designated institution for yourself, your spouse or your common-law partner. Withdrawals cannot be used to cover training or educational expenses for your children or your spouse/common-law partner’s children.

Most educational institutions in Canada will qualify as “designated institutions,” as will many institutions in the US and abroad. As of 2019, the maximum yearly withdrawal limit is $10,000 up to a total limit of $20,000 (once you reach this, you’ll have to wait a while to withdraw again).

Registered Retirement Savings Plans (RRSPs)

High interest savings account

Safer than investment accounts that grow your funds on the stock market, savings accounts provide a predictable rate of return and a guarantee that you won’t lose any of the money deposited into your account. Another upside is that just about every commercial bank and credit union provides a variety of savings accounts with various fee structures and interest rates, so you’ll have many options to choose from. Check out the table below to compare popular account options offered by reputable financial institutions.

A downside of using a savings account to grow money for school is that you won’t earn a very high amount. Interest rates typically range from 0.5%-2.5%, which hovers around the annual rate of inflation. But if you’ve grown a sum of money and want to put it somewhere where you can access it easily, protect it from eroding in value due to inflation and maybe even earn a little profit, a savings account could be the right option for you.

Compare savings accounts

Name Product Interest Rate Promotional Interest Rate Min. Bal / Min. Deposit Account Fee
EQ Bank Savings Plus Account
$0 / $0
Enjoy zero everyday banking fees, free transactions and no minimum balance with a Savings Plus Account from EQ Bank.
Neo Financial High Interest Savings Account
$0 / $0
Get a competitive interest rate and unlimited free transactions with no monthly fees or minimum balances.
KOHO Earn Interest
$0 / $0
Opt into earning interest for free and earn 1.2% on your entire balance in KOHO plus an additional 0.5% in cash back on every purchase you make.

Compare up to 4 providers

Compare joint bank accounts

If you are saving for university or college with help from your parents or grandparents, you may want to look into opening a joint account. These accounts allow you to open a single account and share access with someone else (or sometimes multiple people). This makes it easy for multiple people to contribute to your college or university fund.

Name Product Interest Rate Promotional Interest Rate Min. Bal / Min. Deposit Account Fee
EQ Bank Savings Plus Account
$0 / $0
Enjoy zero everyday banking fees, free transactions and no minimum balance with a Savings Plus Account from EQ Bank.
KOHO Earn Interest
$0 / $0
Opt into earning interest for free and earn 1.2% on your entire balance in KOHO plus an additional 0.5% in cash back on every purchase you make.

Compare up to 4 providers

In-trust accounts

An in-trust account (also called an informal trust account) is an investment account opened by an adult for a minor, and allows the adult to invest funds on behalf of the minor. Once the in-trust account is set up, the minor becomes the sole owner of the account.

While an in-trust account can be used as an alternative to an RESP, keep in mind that the owner can use the funds in the account for anything once they reach the age of majority. Also unlike RESPs, there is no maximum contribution to the account, and generally all income is attributed back to the contributor (not necessarily the child who owns the account).

Like RESPs, in-trust accounts can be opened through a financial institution.

Cash value from a whole life insurance policy

Whole or permanent life insurance policies can protect you and your family, but they can also be used to pay for major expenses. Policies are broken down into a death benefit amount and a cash-value portion that’s invested and grows over time. After you’ve built up enough cash value, you can borrow from your policy. You aren’t required to repay the loan, but your death benefit may be reduced if you don’t.

Whole life insurance


Although it might seem like a strange way to get money for school, crowdfunding can provide a way to solicit donations from friends and family who want to help you get off to a strong educational start. You’re unlikely to get money from complete strangers this way, but crowdfunding can still provide a convenient way for those who care about you to show their support.

Sites like GoFundMe and Fundrazr are popular with individuals looking to raise funds online for a wide variety of reasons.

How much does it cost to go to college or university?

In Canada, community college is less expensive the university. However many other costs, such as transportation, books, supplies and housing are comparable. The table below can give you a rough idea of what you can expect to pay for 1 academic year at college and university. Keep in mind these figures are based on attending public institutions; private schools will cost more.

University (approx.)Community college (approx.)
Tuition & fees$7,500$2,500
Textbooks & supplies$1,200-$1,800$1,200-$1,800
Transportation$1,100 (public transportation) – $7,000 (own your own vehicle)$1,100 (public transportation) – $7,000 (own your own vehicle)
Food & housing$14,000-$18,000$14,000-$18,000

How much financial aid is available?

Merit-based and entrance scholarships for undergraduate and college students commonly range from $1,000-$5,000 per year per student. Government grants are often $2,000-$8,000 yearly for each student. While some awards are one-offs, others require that students maintain a certain academic performance or continually demonstrate financial need in order to keep receiving the same level of financial aid throughout their studies.

The amount varies widely based on students’ individual needs, academic performance, work and volunteer experience, programs, where they’re attending school and other factors. Speak to a financial aid advisor at any college or university you’re interested in attending to find out what aid you’re eligible to receive.

Compare ways to save for college or university

RESPLifelong Learning Plan (RRSP)Whole life insuranceCrowdfundingSavings account
Monthly feesMaybeMaybeYes (premiums)No (but you may have to pay one-time platform fee or a fee per donation raised)Maybe
Tax advantagesYesYesMaybeNoMaybe
Can be investedYesYesYesNoNo
Guaranteed investment returnsMaybe (depends on the way funds are invested)Maybe (depends on the way funds are invested)Maybe (depends on the way funds are invested)NoYes
Could impact financial aidYesYesMaybeNot likelyNot likely
Contribution limitYesYesNoNoNo
PenaltiesWhen used for ineligible expensesWhen used for ineligible expensesNoNoNo
Can only be used for educationYesCan only withdraw from an RRSP for retirement income, buying a house or covering educational costsNoEthically speaking, you should use funds for the purpose advertised to the public, but crowdfunding platforms typically can’t prevent you from doing otherwise.Usually, no

Tips for reaching your education savings goals

Consider these essential steps to help prepare your children for the future:

  • Establish clear and realistic financial goals. To estimate how much you’ll need to save, think about how many kids you plan on sending to college, how many years you have to save and how much room you currently have in your budget to contribute. Remember to factor in costs other than tuition like housing, textbooks, food, extracurricular activities, tutoring (if necessary) and transportation.
  • Start early. The more time you have to save, the more compound interest will work in your favour. So, the best way to save for college is to start early. Ideally, you should start as soon as your child is born, but if it’s too late to do that, don’t worry. Any amount saved is better than none at all!
  • Save in a joint account. If you don’t already have one, a joint savings account can help you and a partner save and earn interest together.
  • Make regular contributions. Routine contributions are by far the most effective way to save for large purchases like college. If you can afford to put away $200 a month from the time your child is born, you’ll have $43,200 by the time they’re 18 — not counting the effect of compound interest on your investment.
  • Automate your savings plan. Set up automatic withdrawals from your chequing account or download an app that uses roundup strategies or micro-investing to help you save without even thinking about it.
  • Invest extra cash. If you earn a bonus, get a tax refund, receive an inheritance or pay down debts, consider redirecting your spare cash into your college savings plan.

Where to find scholarships, grants and bursaries

According to CBC, millions of dollars’ worth of scholarship money goes unclaimed each year. Often, students assume they need very high grades or that they have to jump through an insane number of hoops to be awarded a scholarship. In fact, the majority of scholarships are not merit-based and may not take more than a few hours to apply for.

While this could seem like a long time, the results could really pay off, even if you only win a few of the awards you apply for.

There are several established companies that produce robust online databases tracking scholarships and bursaries available in Canada. You can browse through thousands of scholarships worth millions of dollars on the following sites:

What’s the difference between a loan and a grant or bursary?

Short answer – loans have to be paid back, but grants and bursaries don’t. A loan is usually paid back with interest, meaning you pay extra for the convenience of borrowing money you don’t have at the moment. Grants and bursaries are free money. You can keep these funds without any fees and without having to pay anything back.

Bottom line

If you start early, set goals and look for areas to save, then contributions to your education fund could eventually have a huge impact. Compare the best student bank accounts to find an option that fits your budget and educational goals.

Frequently asked questions

More guides on Finder

Ask an Expert

You must be logged in to post a comment.

Go to site