Teenage students from poor backgrounds are being forced to drop out of college because the Government's replacement for the Educational Maintenance Allowance (EMA) is "unfair and totally inadequate", according to a report published today.
The study from children's charity Barnardo's said the Bursary Fund is failing to support disadvantaged 16 to 19-year-olds to cover the everyday costs of studying or training in England.
Some teenage students are being forced to skip meals in order to afford the bus to college because of lower levels of money and a lack of access to the "disastrous" grant, the report adds.
The £560 million EMA scheme, a weekly payment of between £10 and £30 given to the poorest teenagers living in households earning less than £30,800 a year, to help them stay in education, was controversially scrapped by the Coalition last year.
It was replaced by the £180 million Bursary Fund made up of two parts - a guaranteed payment of £1,200 for a small group of the "most vulnerable" teenagers, such as those in care or with a disability, and a "discretionary fund" for schools and colleges to hand out to those facing "genuine financial barriers".
The Barnardo's report, which looked at the experiences of 51 disadvantaged college students, said cuts to funding and the confused targeting of the new scheme was leaving many vulnerable young people without sufficient means to carry on learning.
The study, called Staying the Course, said: "Without improvements, many of the young people that the Bursary Fund should support will be held back because they say they cannot afford to continue.
"As previous research has shown, poor and disadvantaged young people often need encouragement to continue in education and training.
"However, the findings of this research indicate that in many cases the new funding system fails to address their needs for financial support, potentially discouraging them from participation in education and training."
Barnardo's chief executive, Anne Marie Carrie said: "The Bursary Fund is an unfair and totally inadequate replacement for the Education Maintenance Allowance.
"The Government has a moral duty to urgently invest in adequate help for 16 to 19-year-olds from poorer backgrounds to stay the course and complete their education or training. The alternative is to risk losing a whole generation to the trap of long-term unemployment because they don't have any qualifications."
The charity is calling for immediate improvements to the way the fund is targeted and administered.
These include making the funding available to all youngsters who have received free school meals, with each student receiving £30 per week. It also called for a simplification of the "confused and inconsistent" system.
The report added: "Although the government has identified four vulnerable groups who are guaranteed adequate financial support, many more disadvantaged young people are left behind with minimal or no funding, such as young carers.
"As a result some young people are experiencing a range of forms of hardship, including missing meals in order to afford bus fares, and being unable to borrow from parents to cover costs of studying."
A DfE spokesperson defended the decision to abolish the EMA saying it was " wasteful and poorly targeted".
"We are taking a much more targeted approach by providing £180m a year to the 16 to 19 year-olds who most need help to continue their studies."