Lifelong Learning Plan: Paying For Your Education

Much has been said about how you can save for your child’s education using the Registered Education Savings Plan (RESP) and associated government grants (CESG, CLB, Provincial education grants).

So, how about if you need to go back to school? What are the options you have for funding your dreams of further education? And, how does the Lifelong Learning Plan work?

Some reasons why as an adult you may decide to go back to school include:

  • To increase your income-earning ability
  • Your current or future job requirements
  • Your personal interest, dreams, and goals
  • For fun

The options that are available to fund your back-to-school project include:

  • Taking on a student loan
  • Withdrawing money from your RRSP via the Lifelong Learning Plan (LLP)
  • Applying for scholarships, grants, and other financial aids
  • Schooling and working part-time
  • Dipping into savings such as a TFSA
  • Employer tuition reimbursement programs

lifelong learning plan LLP

How the LLP works

The Lifelong Learning Plan is a government program that allows you to withdraw money from your RRSP to pay for full-time education or training. You can withdraw up to a maximum of $10,000 per calendar year and a total of $20,000 through the program. The funds can be used by you, your spouse, or common-law partner.

To be eligible, you must:

  • Own an RRSP account and be a resident of Canada
  • Be a full-time student (or part-time if you have a disability)
  • Enroll in a qualifying educational program at a designated educational institution

Other things to note:

  • You have up to 10 years to pay back the LLP to your RRSP.
  • A minimum of 10% of the amount withdrawn must be paid back each year.
  • There are no limits to the number of times you can use the LLP over your lifetime. After paying back the full amount owed, you can take out another LLP.
  • No tax is levied on withdrawals if withdrawals and repayment rules are adhered to.
  • If you pay back less than the required amount per year, the balance is added to your income for the year.
  • Unlike the RESP, LLP cannot be used to fund your kids or grandkid’s education.
  • You can make an LLP withdrawal while also making a Home Buyers’ Plan withdrawal.
  • You cannot claim a deduction tax for repayments made under the LLP.

Final Thoughts

The LLP is one of many options for adults who plan to go back to school to pay for their tuition, living expenses, books, etc. If you will be raiding your retirement pot to further your studies, ensure you have done your homework properly. In the grand scheme of things, ensure that your further education plan is worthwhile, necessary, and likely to lead to success!

For more information on how to access the LLP, speak to your financial institutions or call the CRA at 1-800-959-8281.

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. His writing has been featured or quoted in the Toronto Star, The Globe and Mail, MSN Money, Financial Post, Winnipeg Free Press, CPA Canada, Credit Canada, Wealthsimple, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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