Politics & Policies

Registered Education Savings Plan (RESP) in Canada – An account at age 15 is associated with higher postsecondary enrolment rates by age 19

The registered education savings plan (RESP) investment vehicle is designed to encourage parents of school-age children to save early for their children’s education. This study investigates RESP investments in families, by family income, and subsequent postsecondary enrolment among children in these families.

The study finds that among families with children under the age of 18, RESP holding rates and average dollar amounts were higher for those in higher income quintiles. This pattern held for both years examined—1999 and 2012. While average RESP dollar holdings increased for families in all income quintiles throughout the period, they grew fastest among families in the top income quintile in both absolute terms and relative terms. The gap in RESP holdings between families at the top and bottom of the income distribution was largely attributable to higher wealth and (to a lesser extent) higher levels of parental education among families at the top of the distribution. A lower level of awareness of RESPs among families in the bottom income quintile may have also been a factor.

In addition, the study finds that having access to an RESP account at age 15 was associated with higher postsecondary enrolment rates by age 19, independent of family income. The gap in postsecondary enrolment rates between RESP holders and non-holders declined over time in all income quintiles. By age 27, the association between RESPs and enrolment was still positive across the income distribution, but it was statistically significant only for youth in the second, third and fourth income quintiles. A positive association between RESP use and postsecondary enrolment was also found among boys and girls, both in the short term and in the long term; however, the association was about twice as strong among boys.

Chosen excerpts by Job Market Monitor. Read the whole story at Which Families Invest in Registered Education Savings Plans and Does It Matter for Postsecondary Enrolment?


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