Bedford college, which has 3,000 16 to 18-year-olds, will give the cash to students on Level 3 courses, including A-levels.
It will be restricted to those who have achieved five grade A* to B GCSE passes, attend regularly and remain on their course.
Students will receive pound;500 for every year they complete, to a maximum of pound;1,000, and the payments will be spread over three instalments each year.
Principal Ian Pryce estimates this will cost the college - with an annual budget of pound;20 million - at least pound;80,000 in the first year.
He said he is introducing the scheme because of the impact of education maintenance allowances, where students can obtain pound;30 a week from the Government.
He said: "We have been really impressed with EMAs. The retention rate for that group of students is 93 per cent, 12 per cent higher than the college average.
"Only about 320 of our students receive EMA payments and we wanted to extend that principle in a non-means-tested way."
He also expected to see a slight increase in recruitment as a result of the offer, and said it could persuade some high-achievers to take up vocational courses.
"We have a strong reputation among disaffected students with our Way to Work and other programmes," he said.
"This scheme is a way of reinforcing the fact that we have a place for the more able and more motivated student as well."
Around 2,700 Bedford students are taking vocational courses, with the other 300 taking A-levels.