The incentive scheme at Trowbridge College, Wiltshire, caused an outcry among heads of local schools. But the principal, George Bright, was forced to drop the idea after it attracted only 15 would-be students.
They needed the Further Education Funding Council revenue for at least twice the number of students to make viable the scheme which was to renew the college's drive to expand into the A-level market.
Mr Bright was "surprised and very disappointed" that the scheme had failed to take off.
"I think it was indicative of the pressure that was applied to students in some cases and of the level of misrepresentation that took place," he said.
The college hired a marketing company to pinpoint potential students, sending mailshots to their homes.
Heads wrote to Mr Bright in protest and some banned the Trowbridge prospectus.
The then education and employment minister, James Paice, condemned the scheme, saying: "It cannot be good value for money. I do not welcome or endorse this sort of activity."
Trowbridge College has not offered A-levels since 1994.
"We are considering options and trying to get courses off the ground for next year. It is too early to say what shape or form these will take but we won't be offering incentives or rewards," Mr Bright said.
He estimates a potential catchment of at least 700 students in the west of Wiltshire alone.
"In the context of tuition fees, which we foresaw, we did not think it would be an unreasonable proposition," he said.
Colin Smith, head of Hardenhuish School and spokesman for Wiltshire Association of Secondary Heads, dismissed the claim that undue exertion was put on pupils to reject the offer. "I would be very surprised if any were given inappropriate advice," he said.
However, he accepted that there was a great deal of anger at the incentive proposals among local heads.
"We are all involved in marketing ourselves when looking for students but I think the bounty that was being offered was taking marketing into a much more unhealthy area."
Mr Smith also admitted that had the bid been successful, there would have been a snowball effect.
"We would have had to look more closely at similar strategies. Education budgets are stretched as it is, Trowbridge College was taking us down a slippery slope."
This was not the way to do it, Mr Smith said, as it would lead to more and more money being spent on services other than education.