An RESP and a student loan pay for the same thing from opposite ends. With an RESP, the family saves before school and the federal government adds a grant to the savings; with a student loan, the student borrows during school and repays afterwards. The two aren’t exclusive: money taken out of an RESP doesn’t reduce how much student aid you can get in Ontario, for example, so most families who save still apply for aid, and the loan covers what savings don’t.
This page compares what each costs. The RESP rules themselves are covered in the investing section’s RESP guide, and student loans across the provinces on the student loans hub.
What each one costs the family
| RESP | Student loan | |
|---|---|---|
| Government money | The Canada Education Savings Grant adds 20% on the first $2,500 a year, up to $7,200 per child | Canada Student Grants and provincial grants, if the student qualifies on income, assessed with the loan |
| Who pays | Parents or family, before school | The student, after school |
| Interest | Investment growth is tax-sheltered until withdrawn | Federal part 0%; the provincial part depends on the province |
| Tax | Grants and growth are taxed as the student’s income when withdrawn | Interest paid earns a tax credit |
| If plans change | Contributions come back; grants are repaid | Only what is borrowed is owed |
The grant rules, the extra grant for lower-income families and the Canada Learning Bond are explained in the CESG guide, and how withdrawals are taxed (educational assistance payments) in RESP withdrawal strategies.
A worked comparison
A family contributes $2,500 a year to an RESP for 14 years: $35,000 of their own money. The basic grant adds 20% of each $2,500, or $500 a year, $7,000 in total, before any investment growth. That is $42,000 available for school.
Without the RESP, the student borrows the same $42,000. Even if all of it were interest-free federal money, repaying it on the standard 114-month schedule takes about $368 a month for 9.5 years after graduation, and any part borrowed from a province that charges interest costs more.
The difference: in the RESP case the family put in $35,000 and the government $7,000; in the loan case the student repays every dollar of $42,000. Investment growth inside the RESP would widen the gap; it isn’t counted here.
The comparison leaves out what each side gives up. The family’s RESP contributions could have gone elsewhere, such as paying down a mortgage or into an RRSP or TFSA, and a student who qualifies for large grants borrows less in the first place. The RESP calculator models savings with growth, and the student loan repayment calculator models repayment at any interest rate.
How they fit together
- Aid is assessed on need. Families with RESP savings still apply for student aid; the Canada Student Grants guide covers what the federal government gives without repayment, and the OSAP guide shows how Ontario assesses need.
- Debt after school has safety nets. A student who borrows can lower payments through the Repayment Assistance Plan, and some graduates have part of their loan cancelled, covered in student loan forgiveness in Canada.
- Other ways to cover the gap. Scholarships, work and grants are covered in how to pay for college without loans.
If the child doesn’t go on to post-secondary school, the RESP options (changing the beneficiary, moving growth to an RRSP, returning the grants) are in what happens to an RESP if your child doesn’t go to university.
Sources
The figures and rules on this page come from these sources, last checked against them between August 29, 2026 and September 28, 2026. How we check facts.
- Canada Revenue Agency: Registered Education Savings Plans (RESPs)
- Employment and Social Development Canada: Canada Student Financial Assistance Program annual report 2023 to 2024
- Government of Ontario: Pay back OSAP