The Canada Learning Bond (CLB) is a government-funded program designed to help low-income families save for their child’s education. The program provides an initial deposit of $500 and additional annual deposits of up to $100 into a Registered Education Savings Plan (RESP) for eligible children. The purpose of the CLB is to encourage families to start saving for their child’s education early, even if they have limited resources.
How Does the Canada Learning Bond Work?
The CLB is available to families who receive the National Child Benefit Supplement and have a child born on or after January 1, 2004. To receive the CLB, families must open an RESP for their child and provide their Social Insurance Number to the government.
Once an RESP has been opened, the government will deposit the initial $500 and any additional annual deposits into the account. The funds in the RESP can be used to pay for post-secondary education, including college or university programs, apprenticeships, and certifications.
Example Calculation Let’s take an example of a family who receives the National Child Benefit Supplement and has a child born on January 1, 2010. The family opens an RESP for their child and provides their Social Insurance Number to the government. The government will deposit $500 into the RESP, and an additional $100 each year until the child reaches 17 years of age. In total, the government will have deposited $2,000 into the RESP by the time the child turns 17.
Pros and Cons of the Canada Learning Bond
Pros:
- The CLB provides low-income families with an initial deposit and annual contributions to help save for their child’s education.
- The CLB can encourage families to start saving for their child’s education early, even if they have limited resources.
- The CLB can help families reduce the financial burden of post-secondary education by providing funds for their child’s education.
Cons:
- The CLB is only available to families who receive the National Child Benefit Supplement and have a child born on or after January 1, 2004.
- The CLB funds must be used for post-secondary education, which may limit the flexibility of families to use the funds for other purposes.
- The CLB funds are taxed when they are withdrawn from the RESP, which may reduce the amount of funds available to the family.
The Canada Learning Bond is a government-funded program designed to help low-income families save for their child’s education. The program provides an initial deposit of $500 and additional annual deposits of up to $100 into a Registered Education Savings Plan (RESP) for eligible children. The CLB can provide families with the resources they need to start saving for their child’s education early, but it also has some limitations and drawbacks, such as the requirement to use the funds for post-secondary education and the taxation of funds when they are withdrawn from the RESP.