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What You Need To Know About The Lifelong Learning Plan

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Much has been said about saving 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 you may decide to go back to school as an adult include:

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

Some options for funding your back-to-school project are:

  • 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 Does The Lifelong Learning Plan (LLP) Work?

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 your common-law partner.

Who is Eligible for the Lifelong Learning Plan

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  • A minimum of 10% of the amount withdrawn must be paid back each year.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 kid’s or grandkid’s education.
  • You can make an LLP withdrawal and a Home Buyers’ Plan withdrawal simultaneously.
  • 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 return to school to pay for their tuition, living expenses, books, etc.

If you are 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 accessing the LLP, contact your financial institutions or call the CRA at 1-800-959-8281.

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Enoch Omololu, MSc (Econ)

Enoch Omololu, personal finance expert, author, and founder of Savvy New Canadians, has written about money matters for over 10 years. Enoch has an MSc (Econ) degree in Finance and Investment Management from the University of Aberdeen Business School and has completed the Canadian Securities Course. His expertise has been highlighted in major publications like Forbes, Globe and Mail, Business Insider, CBC News, Toronto Star, Financial Post, CTV News, TD Direct Investing, Canadian Securities Exchange, and many others. Enoch is passionate about helping others win with their finances and recently created a practical investing course for beginners. You can read his full author bio.

About Savvy New Canadians

Savvy New Canadians is one of Canada's top personal finance platforms. Millions of Canadians use our site each year to learn how to save for retirement, invest smartly, maximize rewards, and earn extra cash. We have been featured in prominent finance media, including Forbes, Globe and Mail, Business Insider, CBC, MSN, Wealthsimple, and TD Direct Investing. Learn more about Savvy New Canadians.

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