The payments made from an RESP to the beneficiary are called Educational Assistance Payments (EAPs). EAPs are considered income that the beneficiary must declare.
If the beneficiary decides not to pursue postsecondary studies, the contributor can withdraw the contributed funds and the interest paid, but any grants will have to be repaid. You can transfer these funds to an RRSP to continue saving tax-free.
For more information on withdrawals, visit our page on using your RESP.