Since 2003, the Government of Canada has offered the Canada Learning Bond (CLB) to encourage families get started with their education savings. Based on a family’s net income, the government will deposit an initial $500 to a child’s Registered Education Savings Plan (RESP), and $100 per year until the child turns fifteen.

Unlike the Canada Education Savings Grant (CESG), personal contributions to an RESP are not needed in order to receive CLB. That means eligible families could receive up to $2,000 to use towards their child’s post-secondary education. Families who are able to make contributions to their RESP can access other education savings incentives like the Canada Education Savings Grant and Additional Canada Education Savings Grant to make their savings grow even faster.

The funds in an RESP can be used to help pay for your child’s full- or part-time studies after high school whether it’s an apprenticeship program, trade school, college, CEGEP or university. As the cost of post-secondary continues to rise, it’s important to take advantage of education saving incentives like the Canada Learning Bond.

How to Access the Canada Learning Bond

The Canada Learning Bond is an ‘income tested’ benefit – meaning it is offered based on your family income. Originally, families who qualified for the National Child Benefit (NCB) program were eligible to receive the Canada Learning Bond. With the introduction of the Canada Child Benefit, new guidelines based on the number of children and an “adjusted net family income” took effect on July 1, 2017.

Who can access CLB?

The Canada Learning Bond is available to children born after December 31, 2003 and whose family net income falls is below a specified level. The primary care giver should also be eligible to receive the Canada child benefit.

How is Adjusted Net Family Income Calculated?

Adjusted net family income is calculated by combining the net incomes of you and your spouse or common-in-law partner. It is adjusted by reducing any benefits received from the Universal Child Care Benefit or a Registered Disability Savings Plan.

The number of children in a family is taken into consideration to determine eligibility for CLB. Here’s how:

  • Families with up to three children can qualify for the CLB if their adjusted net family income is less than the lowest income tax threshold.
  • Families with more than three children can qualify for the CLB if the adjusted net family income is less than the amount determined by the formula.

 Adjusted net family income levels and number of children for the 2017-2018 benefit year are:

No. Of ChildrenAdjusted net family income 2017
1 to 3Less than or equal to $45,916
4Less than $51,809
5Less than $57,724
6Less than $63,640
7Less than $69,556
8Less than $75,472

Three Steps to Access CLB

Figuring out your adjusted family net income level might seem complicated but with the help of an RESP provider, accessing the Canada Learning Bond is as easy as 1-2-3.

  1. Open a Registered Education Savings Plan (RESP) for your child/children.
    Check the list of RESP providers to find which government education grants each provider offers. Knowledge First Financial for example offers all available government grants.
  2. Apply for the Canada Learning Bond.
    Your RESP provider will apply for CLB on your behalf and the first deposit of $500 will be deposited into your RESP.
  3. Submit your tax return annually to receive an additional $100 per child
    Based on your adjusted family net income, CLB will automatically be deposited into your RESP.

Two-Thirds of Eligible Canadian Families Have Yet To Benefit From CLB

Canada is one of the most educated countries according to the Organisation for Economic Co-operation and Development , ranking 1st worldwide in the number of adults to have a post-secondary education. The Financial Consumer Agency of Canada reports that the majority of parents with children under the age of 18 are saving for post-secondary education. Each year, more eligible children are receiving the Canada Learning Bond, according to the latest Canada Education Savings Program Annual Statistical Review.

Reading these facts, it might be surprising to learn that two-thirds of eligible Canadian families have yet to benefit from the Canada Learning Bond. For others, balancing the desire to save for the future with challenge of meeting day-to-day expenses is a real obstacle to setting up a Registered Education Savings Plan (RESP).

That’s why the Canada Learning Bond is a great incentive to help modest income families get started with their education savings. Some call CLB ‘free money’ and it is – no personal deposits into an RESP are required. It just takes an investment of your time to do a bit of RESP research to choose the right provider for you.

If you are able to make personal contributions to your RESP, this money will be matched 20% by the Canada Education Savings Grant (CESG). If your family income falls below a specified level, you can receive an additional 20% of matching funds.  There is up to $7,200 in CESG available to each Canadian child.

Haven’t gotten around to setting up an RESP yet?

You are in good company! Not being able to get to the task of opening an RESP is one the most common reasons Canadians are not saving for post-secondary education. To help break the time barrier, here are some resources to help you learn more:

With a little research, you can choose an RESP provider to help you access the Canada Learning Bond and other government education grants that can help your children continuing beyond high school.

Three Reasons to Access the Canada Learning Bond

  1. The Canada Learning Bond is free money to use towards post-secondary education. No further explanation required on this point!
  2. The cost of education is going up. With the cost of education rising faster than inflation and stories about the challenges of working in a gig economy, the question is inevitable – is getting a post-secondary education worth the expense? If you are living on a modest income, the answer might be ‘no.’ Consider this. When it comes to overall employment opportunities, the value of post-secondary education is echoed by the latest projections from the Canadian Occupational Projection System. Economic growth and replacement needs are expected to create 5.95 million job openings between 2015 and 2014. Two-thirds of these positions will require college, university or vocational education.
  3. A post-secondary education opens many doors to a better future. A rewarding career is not just about the money. Job seekers are motivated by many other factors – making a difference in the community, having work-life balance, and the list goes on. According to global education trends watcher, the Organisation for Economic Co-operation and Development (OECD) reports that those with a post-secondary education will enjoy greater employment stability, better health, and a higher level of overall life satisfaction.

How to Use CLB Money

The funds in an RESP grow tax-free for up to 35 years from the time it’s opened. Once your child starts a post-secondary program at a recognized institution, money can be withdrawn from the RESP to cover the costs of tuition, books and living expenses.

A recognized institution is one that qualifies as a post-secondary educational institution under the Income Tax Act. This includes colleges, universities, technical institutes, religious colleges as well as private post-secondary schools.

In order to withdraw funds from an RESP, the post-secondary program must be:

  • Minimum three consecutive weeks duration
  • 10 hours of instruction per week
  • Full- or part-time

Save Early and Save Often

Saving for your child’s education is one of the best things you can do for them. By opening an RESP early in your child’s life, you’ll receive CLB sooner and your savings will have more time to grow. Although starting early will have you save more in the end, saving something is the most important thing of all.

Whether you prefer to save a little your child’s RESP each month, or contribute for a few years and let your savings grow on their own, there are flexible options that fit within your family budget today.