Saving for Post-Secondary Education: A Look at the History of One of Canada’s Leading RESP Providers

Launched in 1972 by the Canadian government, Registered Education Savings Plans (RESPs) have become a popular way for families to finance their children’s post-secondary education.

RESPs became even more popular when, in 1998, the federal government introduced an incentive program. The introduction of the Canada Education Savings Grant  made each family’s investment richer by matching 20% of the first $2000 contributed up to $400 a year. The Government now matches 20% of the first $2500 contributed up to $500 a year – to a maximum lifetime limit of $7,200 per beneficiary.

The addition of grant money from the government has translated into a program that more families take advantage of each year. According to data released by Employment and Social Development Canada (ESDC), by the end of 2016, total RESP assets had reached $51.3 billion, nearly doubling from what they had been 7 years earlier. ESDC data also illustrated that only 51 percent of eligible Canadian children had received a CESG.

In many ways, the RESP program would not have come to be had it not been for the efforts of six like-minded individuals who believed that all Canadian children should have the financial resources necessary to pursue a post-secondary education. This belief and mission led them to form the Canadian Scholarship Trust Foundation (CST Foundation) in 1960, which designed and now sponsors the Canadian Scholarship Trust Plans (CST RESPs) to help make education savings possible.

Within five years of opening, the CST Foundation had achieved over 13,000 referrals, and by 1969, it was leading a push to change the Income Tax Act.  The founders proposed that education savings interest payments should be taxed in the students’ hands (not their parents’) as students typically pay little or no taxes. The group was successful and by 1972, the Government of Canada introduced the RESP and changed the Income Tax Act.  Saving for a child’s post-secondary education became easier and more advantageous for parents.

 

In 1988, the CST Foundation incorporated CST Consultants Inc.as the exclusive distributor and investment manager of CST RESPs.   As at October 31, 2017, CST Consultants manages over $4.7 billion in assets for more than 250,000 Canadian families.     

 

Today, the CST Foundation continues its work and remains an active not-for-profit with a robust program of grants, scholarships, awards and bursaries enriching the community with almost $2 million since it began in 1960.