Statistics released this fall show that Canada's richest families are disproportionately benefiting from the federal government's education savings grant program.

Households earning more than $80,000 a year are about three times more likely to have registered education savings plans than families earning less than $30,000.

Ottawa provides a generous grant linked to contributions made to a RESP as a way of encouraging parents to save for their children's education.

Under the program, parents can deposit up to $2,000 a year and the federal government contributes a grant of 20 per cent of plan contributions made in a year. The grant is deposited directly into the plan.

By the end of the year, Ottawa estimates it will have paid out about $1 billion since the savings grant program was created in 1998.

"It's ludicrous that $1 billion is going to families least in need at the same time rising tuition fees are making it more difficult for lower income families to send their kids to university and college," said CAUT president Tom Booth. "Surely there's a better way to spend this money."

Overall, just 6 per cent of Canadian families had RESP savings in 1999. Of those, less than 10 per cent were low-income households.

In its brief this year to the House of Commons Standing Committee on Finance, CAUT called on the government to replace the Canada Education Savings Grant and other programs with a needs-based grant system that provides financial assistance to students who need it most.