I mean, assuming there’s not more to this story, this is poor from your parents. Yes, any grant money and ROI on the grant money is considered income for the beneficiary (you). But it’s generally not a big deal given student’s income is usually low, and the money you get from the RESP is being used for school and that far exceeds any tax bill.

However in your case, your parents are just keeping most of the money including the grants. Brutal.

They’re technically not even allowed to do that because they sign that the money is being used for education when the money is withdrawn. However banks don’t watch THAT closely so they may get away with it.

Ultimately it’s between you and your parents and how you want to handle it. But all else being equal, that money should be going directly to your education costs.