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Education, the very thing RESPs are designed to promote, may be what's preventing more Canadians from taking advantage of the savings plan.

A study by the Certified General Accountants Association of Canada concludes that those who could benefit the most from registered education savings plans - low-income Canadians - are the least likely to take advantage of them. And affordability is not the main issue, says Rock Lefebvre, CGA-Canada's vice-president of research and standards.

"Since the RESP program is comprised of several components, most people lack a clear understanding of how it works and what the benefits to them would be," said Mr. Lefebvre, who co-authored the report, Registered Education Savings Plans: Valuable Opportunities for the Students of Tomorrow. "This is particularly true with the very people who stand to benefit the most from the RESP program, lower-income Canadians."

Investor Education: RESPs

Since its inception in 1972, the RESP has undergone several revisions, the most notable being the 1998 introduction of the Canada Education Savings Grants, in which Ottawa provides 20 cents on every contributed dollar, up to a maximum of $500 annually, with a maximum lifetime payout of $7,200. In 2004, an additional grant was added for lower-income Canadians, offering another 20 cents per contributed dollar for families earning $38,832 or less, up to the first $500 contributed, and an additional 10 cents for families earning between $38,833 and $77,769.

In addition, Ottawa introduced the Canada Learning Bond, a one-time RESP payment of $500, plus $100 annually for families that receive the National Child Benefit Supplement, to a maximum of $2,000.

The study cites a 2008 EKOS Research poll of 900 families making less than $38,000 annually, which showed that although 83 per cent of respondents had heard of the RESP, only 54 per cent were able to actually define it. Only one-third had heard of the Canada Education Savings Grants, and only a quarter correctly understood those grants. Awareness decreased even further for the Canada Learning Bond: Only 1 in 10 respondents had even heard of the bond, and the majority did not fully understand it.

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According to the study, the higher the parents' level of education, the more likely they were to possess RESP knowledge.

"The Canadian public's awareness and understanding of RESPs has become a growing concern," the report states. "RESP explanation is not robust among low-income families, and seeing as this income bracket could benefit the most, communication improvements are needed."

One solution, Mr. Lefebvre says, is increasing financial literacy at the high-school level so that young Canadians learn how to use financial planning instruments.

"What we need to stress is that while we think education savings plans are good for every cohort, they are particularly good for the less affluent, those with lower earnings, simply because they benefit the most. The way the formulas are designed, those earning less than $38,000 a year can, basically, on a $150 contribution, get up to another $590 of government funds. So that's an excellent return."