Millions of pounds allocated to the new bursary scheme replacing the education maintenance allowance (EMA) will be swallowed up in administration fees, it has emerged.
The Department for Education has revealed that schools and colleges will be allowed to use up to 5 per cent of the budget - amounting to #163;9 million - "to meet the costs of administering the scheme", instead of it going to students.
The #163;180 million 16-19 bursary scheme has already come under fire, with critics arguing that it fails to offer adequate support, amounting to less than a third of the EMA's #163;575 million budget.
The Department argues that the scheme will be "less bureaucratic and better targeted than EMA", with 12,000 of the most vulnerable young people, such as those in care or with disabilities, receiving annual bursaries of #163;1,200 - more than they gained under the EMA.
The rest of the money will be handed to schools and colleges to distribute to their students on a discretionary basis, and can be used to help meet travel, food or equipment costs.
But the University and College Union (UCU) warned that the support would be insufficient to persuade young people to stay in education. A union survey published earlier this year said 70 per cent of EMA recipients would drop out of education if the allowance was scrapped.
UCU general secretary Sally Hunt said: "This new scheme simply does not offer the same levels of financial support that young people need to stay on at college."
The Department also confirmed that the discretionary funding for students should be made conditional on them meeting agreed standards of behaviour or attendance.
An additional #163;194 million will be made available for students who are part of the way through their studies and are currently receiving the EMA.
Students who applied in 200910 will continue to receive the same level of funding in the next academic year, while those currently in their first year of post-16 study who received the maximum #163;30 a week will be entitled to a reduced amount of #163;20 per week until the end of 201112.