What Happens to CESG and Other RESP Grant Money If Your Foreign School Doesn't Qualify
By Muntasir • Published May 12, 2026 • Updated Sep 20, 2026 • Canadian Universities & Colleges, Canadian Student Aid & Scholarships
A foreign school that doesn't count as a qualifying post secondary institution blocks the grant portion of an RESP from paying out to the student. The Canada Education Savings Grant, Canada Learning Bond and provincial grants go back to the government, while your own contributions still return to you tax free.
🎓 Grant money only pays out through an Educational Assistance Payment, which needs a school that meets the post secondary definition in the Income Tax Act.
Schools outside Canada face a longer minimum enrollment period than Canadian schools before they qualify.
💵 Your own contributions return to you without penalty regardless of the school.
Investment growth in the plan gets taxed plus an extra 20 percent if it doesn't move to an EAP or your RRSP.
Confirm eligibility with your RESP promoter in writing before requesting any withdrawal.
Why the school matters before you request a withdrawal
A Registered Education Savings Plan holds three different types of money: what you contributed, the Canada Education Savings Grant and any other government grants, and the investment growth on all of it. These three pots get treated differently depending on where your child studies. If the foreign school doesn't meet the Income Tax Act's definition of a post secondary educational institution, the grant money doesn't pay out as a normal Educational Assistance Payment (EAP) to the student.
This catches families off guard when a child picks a short program, a non-accredited school, or an institution that doesn't report enrollment the way Canadian schools do. The RESP promoter, the financial institution or plan provider holding the account, has to confirm the school qualifies before it releases an EAP.
What counts as a qualifying institution outside Canada
The Canada Revenue Agency and Employment and Social Development Canada set the rules for what counts as an eligible educational institution for RESP purposes. A foreign university, college or other post secondary school generally qualifies if the program is recognized as post secondary level study in that country and your child is enrolled in a qualifying full time or part time course load. Programs outside Canada face a longer minimum enrollment period than programs inside Canada before they count for an EAP, so a short course, a single semester exchange with a light course load, or a non-credential certificate falls outside the definition even at a well known school.
Ask the RESP promoter to confirm eligibility in writing before your child enrolls, not after. Promoters keep documentation requirements and tell you exactly what proof they need, such as an admission letter, program length and weekly instructional hours.
Situations that commonly trip families up
A short summer program or single course that doesn't reach the minimum weekly course load.
An online only foreign program with no in-person post secondary accreditation in its home country.
A gap year or preparatory program before the actual degree starts.
A private college or academy abroad not recognized as post secondary by its own country's authorities.
An exchange term booked directly with a foreign school instead of through your child's Canadian university's exchange office.
That last point matters because exchange programs run through a Canadian university's own study abroad office usually keep your child enrolled as a student of the Canadian institution the whole time. In that case the RESP treats the withdrawal as being for the Canadian school, and eligibility isn't in question.
What happens to each part of the RESP if the school doesn't qualify
The outcome depends on which pot of money you try to withdraw.
| RESP money | What happens if the foreign school doesn't qualify |
|---|---|
| Your own contributions | Return to you, the subscriber, tax free at any time, whether or not the school qualifies. |
| CESG, Canada Learning Bond, provincial grants | Don't pay out to the student as an EAP. The grant money goes back to the government or province that paid it. |
| Investment income earned in the plan | Doesn't pay out as an EAP either. It moves to your RRSP if you have contribution room, or come out as an Accumulated Income Payment, taxed at your rate plus an extra 20 percent tax. |
Nobody keeps the grant money for personal use in this situation. It returns to Employment and Social Development Canada, which administers the CESG and the Canada Learning Bond, or to the relevant provincial program.
How the repayment works
You don't personally send a payment to the government in most cases. The RESP promoter processes the repayment as part of closing out that portion of the plan or reallocating it, and reports the transaction to the Canada Education Savings Program. If you already received an EAP and then find out the school didn't qualify, contact the promoter immediately. Sorting this out quickly avoids extra paperwork and tax complications for your child.
Steps to take before you withdraw
Get the school's full legal name, country and program details before applying to the RESP promoter.
Ask the promoter directly whether that institution and program qualify for an EAP, in writing.
Confirm the program length and course load meet the post secondary threshold for schools outside Canada.
If the school doesn't qualify, ask the promoter about your options for the contribution portion, the accumulated income, and any grant repayment process.
Keep enrollment confirmation and program documents on file in case the promoter or CRA asks for proof later.
If you already withdrew and the school turns out not to qualify
Call the RESP promoter first. They administer the account and know the exact repayment and reporting steps for grant money paid out in error. Acting early keeps the correction administrative rather than something that shows up as a tax problem for your child at filing time.