Group RESPs (scholarship plans) pool contributions from many families and are managed by specialized dealers. They can work for disciplined savers, but they come with significant restrictions and fees that often make self-directed alternatives the better choice. Here's what you need to know before signing up.
You commit to a fixed contribution schedule (e.g., $100/month for 18 years). Contributions are pooled with thousands of other families in your "maturity group" (same expected graduation year) and invested collectively by the plan manager. When your group reaches maturity, each participant receives a proportional share of the pool's income.
Group plans typically charge enrolment fees (sales charges), annual administration fees, and insurance charges. Early-year contributions often go heavily toward fees before principal. A prospectus is required to disclose all fees — compare the total fee impact to a self-directed RESP with index ETFs (MER under 0.25%) before signing.
Missing scheduled contributions can result in reduced distributions, make-up fees, or loss of pooled income eligibility. Self-directed RESPs have no such restrictions — you can contribute whenever you have money available, stop and restart freely, without any penalty.
Some group plans limit what counts as a qualifying program — requiring a minimum number of years in school or restricting to degree programs. Self-directed RESPs follow the broader federal definition including trade programs, apprenticeships, and one-year certificates.
A self-directed RESP with automatic monthly ETF contributions achieves the same savings discipline as a group plan while offering: lower fees, flexible contribution amounts, full investment control, no missed-payment penalties, and broader program eligibility. Most Canadian financial planning resources recommend self-directed plans for the majority of families.
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