The federal government will begin notifying eligible families this year about automatic school savings accounts for children, with the first deposits set for 2028, according to a notice sent to financial institutions.
Blacklock's Reporter says children born in 2024 will be the first to receive $500 in automatic savings under the program.
“Automatic enrollment in the Canada Learning Bond will be implemented for eligible children born in 2024 and after,” the Department of Employment stated in a notice to banks and credit unions.
Families will begin receiving notifications in 2025, and accounts will be opened when children turn four. Caregivers or adult beneficiaries will later be able to take over the accounts and make personal contributions.
The initiative provides up to $2,000 tax-free in Registered Education Savings Plans (RESPs) for children from families earning under $56,000 annually. The government estimates that about 130,000 additional children each year will have RESPs opened automatically.
The program follows a 2023 federal audit that found low-income families were the least likely to benefit from RESP subsidies. Many eligible parents had not opened accounts, citing financial constraints, a belief that they could contribute later, or an expectation that their children would rely on loans or personal savings.
Data showed parents least likely to save were typically younger, had larger families, and were still repaying student loans. Auditors also noted that child care costs were a major barrier preventing families from setting aside money for education savings.
The government has not disclosed how much it will pay in fees to banks and credit unions for managing the accounts. The initial Canada Learning Bond payment will consist of $500 in the first year, followed by $100 annually until the child turns 15. Officials are seeking investment options that will protect principal deposits and provide a favorable return for beneficiaries.
Families across Canada have already deposited $78.9 billion into RESPs, according to official estimates. Between 1998 and 2023, nearly 7.7 million beneficiaries received federal Education Savings Grants.
In 2023 alone, 544,000 students withdrew a total of $5.9 billion from RESPs, averaging $10,887 per student. While more families are using RESPs to finance postsecondary education, the program continues to benefit higher-income households disproportionately.