The education maintenance allowance goes to some deserving cases - but other pupils use the money to run cars and go on holiday abroad, according to the general secretary of the Headteachers' Association Scotland.
Figures published this week show that during the last academic year (2006-07), around pound;32.4 million was paid out in EMA support to 38,760 students, as a financial incentive to stay on at school or college. This amounted to an increase of 6.3 per cent on 2005-06.
Most students (81 per cent) received the maximum weekly payment of pound;30.
The figures - published by the Scottish Government - also show students from deprived areas are represented proportionately more on the EMA scheme. Around 15 per cent of all 16-, 17- and 18- year-olds in Scotland are from deprived areas, while 25 per cent of EMA recipients come from these areas.
However, Bill McGregor, general secretary of HAS and headteacher at James Hamilton Academy in Kilmarnock when the scheme was piloted there five years ago, claimed that middle-class parents knew how to fiddle the figures and get their children the cash.
"Some had need of it, but we also had middle-class parents with good accountants who could ensure their child was eligible," said Mr McGregor.
"For those pupils, it was a useful adjunct to the money already in their pocket. They put it towards holidays in Majorca; in some cases it helped them run a car."
Mr McGregor called for more research into the EMA to prove it was having the desired effect. "There is no evidence to link EMA with raising attainment or keeping students on at school," he said.
Conservative MSP Liz Smith, shadow minister for children, schools and skills, went one step further and called on Fiona Hyslop, the Education Secretary, to rethink the scheme.
She said: "The EMA is not having the desired effect since it is failing to target the many youngsters in deprived areas across Scotland who leave school with no clear educational, employment or training future."