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If you are searching for Canadian Scholarship Trust, you are likely a parent or guardian exploring options to save for a child’s post-secondary education. You want to know if CST is a legitimate investment, how the Canadian Scholarship Trust plan works, what the fees are, and whether it is better than a standard bank RESP. This guide covers everything you need to know about the Canadian Scholarship Trust, including the latest updates on the CST Advantage Plan, government grants, and critical comparisons to ensure you choose the right education savings vehicle for your family.
What is the Canadian Scholarship Trust?
The Canadian Scholarship Trust (CST) is one of Canada’s largest providers of Registered Education Savings Plans (RESPs), specifically offering group scholarship plans. Operated by the Canadian Scholarship Trust Foundation, CST has helped over 700,000 families save for education through a disciplined, pooled investment approach. Unlike a standard bank RESP where you manage your own investments, the Canadian Scholarship Trust pools your contributions with families who have children the same age, investing primarily in fixed-income securities to protect the principal.
When searching for a Canadian Scholarship Trust, it is crucial to understand that CST offers specific products, primarily the “CST Advantage Plan.” This plan is designed to maximize government grants while enforcing a strict contribution schedule. The Canadian Scholarship Trust model focuses on long-term savings, but it comes with specific rules regarding withdrawals and what happens if your child does not pursue post-secondary education .
How Does the Canadian Scholarship Trust Plan Work?
Understanding the mechanics of the Canadian Scholarship Trust is essential before committing. Here is a breakdown of the structure:
1. The Pooled Model
When you enroll in a Canadian Scholarship Trust plan, you purchase “units” in a pool specific to your child’s age group. Everyone in that pool contributes according to a set schedule. When the children reach post-secondary age, the accumulated funds (including government grants and investment income) are distributed to those who pursue eligible education.
2. Government Grants
Like all RESPs, the Canadian Scholarship Trust ensures you receive the Canada Education Savings Grant (CESG). The government matches 20% on the first $2,500 contributed annually, up to a lifetime maximum of $7,200 per child. CST also facilitates the Canada Learning Bond (CLB) for eligible low-income families, which adds up to $2,000 without requiring any personal contribution .
3. Investment Strategy
The Canadian Scholarship Trust employs a conservative investment approach. Your principal contributions and grant money are invested in government and corporate bonds to ensure safety. The earnings on these are invested in a diversified mix of equities (U.S., International, and Real Estate) to generate growth .
4. The Payout
When your child enrolls in a qualifying post-secondary program, the Canadian Scholarship Trust pays out in two parts:
- Principal: Your original contributions (minus fees) are returned to you tax-free.
- Educational Assistance Payments (EAPs): This includes the CESG grants, CLB, and investment earnings. The EAPs are paid to the student and are taxed in their hands (usually little to no tax).
Canadian Scholarship Trust vs. Regular RESP: Which is Better?
To determine if the Canadian Scholarship Trust is right for you, you must compare it to a “Self-Directed” or “Family” RESP offered by banks or investment firms. Many financial experts warn that group plans like the Canadian Scholarship Trust carry risks that standard plans do not .
| Feature | Canadian Scholarship Trust (CST) | Regular RESP (Bank/Brokerage) |
|---|---|---|
| Control | Low. You are locked into a contribution schedule. | High. You decide when and how much to contribute. |
| Fees | High enrollment fees (often deducted upfront). Missed payments can forfeit fees. | Low. Typically only trading commissions or account fees; no enrollment fees. |
| Investment Choices | Fixed by CST. Primarily bonds and pooled funds. | Flexible. You can choose stocks, ETFs, GICs, or mutual funds. |
| If Child Doesn’t Go to School | You get contributions back, but CST keeps the investment earnings and enrollment fees . | You get contributions and earnings back (though earnings are taxed + 20% penalty, or can be rolled to RRSP) . |
| Flexibility | Rigid; difficult to pause contributions without penalty. | Flexible; you can stop contributions at any time without penalty. |
Fees and Risks of Canadian Scholarship Trust
One of the most critical aspects to consider when evaluating the Canadian Scholarship Trust is the fee structure and associated risks. While CST markets itself as a safe, hands-off option, the fee model is significantly different from traditional banking products.
Enrollment Fees
The Canadian Scholarship Trust charges an enrollment or membership fee when you open a plan. This fee is typically deducted from your initial contributions. If you miss a payment or your child does not pursue higher education, these fees are generally non-refundable .
Rigid Contribution Schedules
Unlike a standard RESP where you can contribute $50 one month and $500 the next, the Canadian Scholarship Trust requires you to adhere to a strict payment schedule. If you fail to meet these obligations, you risk defaulting on the contract, which can result in losing your enrollment fees and being removed from the pool .
Risk of Losing Growth
If your child decides not to attend post-secondary school, the Canadian Scholarship Trust will return your net contributions (after fees). However, you forfeit the investment earnings and government grants to the pool. These funds are redistributed to other children in the cohort who are continuing their education. In a standard RESP, you can withdraw the growth (subject to tax) or transfer it to an RRSP .
Pros and Cons of the Canadian Scholarship Trust
To help you decide, here is a balanced look at the Canadian Scholarship Trust.
Pros:
- Principal Protection: CST focuses on preserving your contributions.
- Discipline: Forces families to save consistently, which can be helpful for those who struggle with savings discipline.
- Non-Profit Foundation: Operated by a foundation, not a for-profit corporation .
- Government Grants: Automatically applies for CESG and CLB.
Cons:
- High Upfront Fees: Enrollment fees can be a barrier.
- Lack of Flexibility: You cannot easily stop contributions or switch beneficiaries.
- Risk of Loss: You lose earnings if your child does not go to school.
- Lower Returns: Conservative bond-heavy portfolios may yield lower returns than a balanced equity portfolio over 18 years.
Get the complete and updated list of scholarships below:
📄 Latest Scholarship ListPeople Also Ask
Is Canadian Scholarship Trust legitimate?
Yes, the Canadian Scholarship Trust is a legitimate, registered non-profit organization that has been operating in Canada for over 60 years. However, “legitimate” does not mean it is the right fit for every family. It is regulated by provincial securities commissions and follows strict guidelines for RESPs .
What happens if I miss a payment with Canadian Scholarship Trust?
If you miss a payment with the Canadian Scholarship Trust, you risk defaulting on your contract. The plan has a grace period, but prolonged non-payment can result in the termination of your plan. You may lose the enrollment fees you already paid and any accrued interest .
Can I withdraw money from Canadian Scholarship Trust?
You cannot withdraw money from the Canadian Scholarship Trust for personal use without penalty. If you withdraw before the beneficiary goes to school, you typically only get back your net contributions (after fees), and you lose the government grants and investment earnings .
How does the CST Advantage Plan work?
The CST Advantage Plan is the main product offered by the Canadian Scholarship Trust. It is a group RESP where contributions are pooled. It focuses on principal protection through bonds and uses a separate equity portfolio to generate growth. It requires fixed contributions and pays out when the child attends post-secondary education .
How to Open a Canadian Scholarship Trust Account
If you decide that the Canadian Scholarship Trust aligns with your financial goals, here is the process:
- Contact a Representative: CST uses sales representatives (C.S.T. Consultants Inc.) who meet with families to discuss options .
- Read the Prospectus: You will receive a prospectus. It is vital to read this document carefully as it outlines all fees, risks, and the specific terms of the Canadian Scholarship Trust plan you are enrolling in .
- Select a Plan: Determine how many units you wish to purchase and set up your contribution schedule (monthly, quarterly, or annually).
- Provide SIN: To receive government grants, you must provide the Social Insurance Number (SIN) for your child .
Conclusion
The Canadian Scholarship Trust offers a structured, disciplined way to save for your child’s education, particularly for families who appreciate a “set it and forget it” approach with principal protection. However, it comes with significant trade-offs, including high upfront fees, rigid contribution rules, and the potential to lose earnings if your child does not pursue post-secondary education .
For most families, a regular, self-directed RESP at a bank or credit union offers greater flexibility, lower fees, and more control over investment returns. Before signing any contract with the Canadian Scholarship Trust, compare it with other RESP options, read the fine print, and consider consulting a fee-only financial advisor to ensure the plan meets your family’s long-term goals.
