Potential students from low-income families can apply for an educational maintenance allowance of up to pound;30 a week for courses starting in September.
Thousands of possible FE students will be able to apply - although the Department for Education and Skills has only sent application forms to schools.
It says colleges will only get the forms on request. With time running out for teenagers making their choices about where to study in September, the Association of Colleges says schools will have a competitive advantage by getting the paperwork in advance of colleges which might be competing for the same students.
A spokesman for the AoC said: "In the pilot areas they are going out to colleges and schools but not in the rest of the country. This puts colleges at a disadvantage.
"You have to remember that some of the young people we are talking about here, although they may be school age, have already stopped attending school."
Apart from potential students who approach colleges, it says there are more than 100,000 school pupils who attend FE institutions every week as part of the Government's drive for vocational training among the over-14s.
A DfES spokeswoman said: "We have sent them to schools because we think people are more likely to pick them up but we will be sending them to colleges who request them."
The allowance is only available to 16-year-olds in the first year of the national roll-out, except in the parts of the country where it was piloted.
It provides means-tested payments for teenagers who take up courses which involve at least 12 hours of tuition a week, as long as they attend regularly.
Grants of pound;10, pound;20 or pound;30 are available depending on household income. The AoC has campaigned for the maximum grant to be increased to pound;40, claiming the extra incentive would keep significantly more teenagers from dropping out after school.
Education Secretary Charles Clarke said the scheme would cost about pound;500 million a year once it was fully operational.