Is the Canada Learning Bond reaching its target?

New research reveals significant disparities in the program's effectiveness for low-income families

Is the Canada Learning Bond reaching its target?

In a study, the CST Foundation and The Social Research and Demonstration Corporation (SRDC) examined the Canada Learning Bond's (CLB) impact on Canadian families' post-secondary education savings.

This research investigated the efficacy of the CLB, initiated in 2004 to boost education savings for Canadian children from low-income households.

To qualify for the CLB, children need to have a Registered Education Savings Plan (RESP). The CST Foundation, with its expertise in education savings, identified key questions about the CLB's impact and partnered with SRDC to address these questions using data from four sources managed by Statistics Canada.

The report aimed to explore three key questions: the distribution of Canada Learning Bond (CLB) funds based on year of birth and family income, the impact of the CLB on personal education savings, and the reasons behind the lower uptake of the CLB among rural Canadians.

The findings of the study revealed several significant insights.

Firstly, the CLB is not effectively reaching the lowest income families or children in care. In 2016, data showed that only 10 percent of eligible children in households with an income under $10,000 and a mere 7 percent of children and youth in care received the CLB.

Secondly, the study found that the CLB does not bridge the gap in education savings between families with low and high incomes. Although there was an increase in the number of RESP accounts opened for children born immediately after the implementation of the CLB, this did not specifically translate to increased account ownership among low-income families.

As a result, children from low-income households continued to be less likely to have an RESP.

The study also revealed geographic disparities in CLB reception: 26 percent of urban children received the CLB, compared to only 12 percent in the most rural regions

This disparity was not due to a lack of awareness about the CLB among rural parents but was more linked to their lower likelihood of opening a RESP for their children. This resulted in a lower allocation of the CLB in rural areas compared to urban ones.

However, when adjusting for other characteristics like parental education and household income, the difference between rural and urban areas was not statistically significant.

Lastly, the report indicated that access to the CLB varied considerably across Canada. The highest rates of CLB access were in Quebec, Ontario, and British Columbia, while the lowest were in Nunavut, Northwest Territories, Yukon, and Saskatchewan.

Interestingly, newcomers to Canada were more likely to receive the CLB compared to second and third-generation children. Among ethnic groups, Inuit, Metis, and First Nations children had the lowest rates of accessing the CLB, while Filipino and Chinese children had the highest.

Sherry MacDonald, president, and CEO of the CST Foundation, commented, “CST is a passionate advocate for ensuring that all Canadians have the financial resources to pursue post-secondary education. We are proud of our history as the pioneers of education savings in Canada and will leverage this research to shape our dialogue with Federal and provincial governments.”

“The research underscores the importance of our work to contribute to the public discussion of improving post-secondary education access. We remain dedicated to continuing to advance the goal of ensuring that all Canadians, regardless of their background, have access to important tools such as the Canada Learning Bond,” she continued.

Reuben Ford, research director at SRDC, highlighted the issues with the CLB's accessibility, saying, “The Canada Learning Bond is clearly not universally accessible, and many low-income children miss out on this education funding due to administrative and awareness barriers.”

“Although a larger share of children in more recent birth cohorts have a RESP, we have found minimal evidence that initiatives like the CLB have narrowed the gap between RESPs held by lower- and higher-income children. While our findings point to interventions that could increase take up under the existing CLB policy framework, changes to the CLB policy itself may be needed to increase accessibility.”