The government "misjudged" the scale of support needed for students affected by the abolition of the Education Maintenance Allowance (EMA), an education committee has concluded.
The report, published on Monday, details the investigation into financial support for 16 to 18-year-olds. The research was undertaken by a House of Commons education committee who also researched the implications of abolishing the EMA.
Although the report states the change to financial support for this age range was "inevitable", it expresses concern over the replacement of the EMA and how the changeover was conducted.
"We would have welcomed a more measured and public analysis by the government before it reached its decision to abolish the EMA," it said.
"The government should have done more to acknowledge the combine impact on students, particularly amongst disadvantage sub-groups before determining how to restructure financial support."
The report, titled 'Participation by 16-19-year-olds in Education and Training', found nearly a third (29%) of young people not in education, employment or training (Neets), would have continued education after Year 11 if they have received more money to cover the cost of transport.
The Spending Review in October 2010 announced support provided by the EMA would in future be focused on the "most disadvantaged" children. But the sudden change to abolish the support was highly controversial and provoked a vigorous campaign for retention of the allowance.
The education committee was told students used the EMA to cover travel, food and equipment costs. Currently, free school meals are available to pupils in a school sixth form, but not to those studying in further education or sixth form colleges.
"We were told the EMA was a necessity for some, not a luxury. For example, one student 'was constantly on the edge; if her EMA was late she couldn't afford her fare", the report states.
"The EMA provided an incentive to attend college on time and to focus on studying. The loss of EMA could result in behavioural issues for those who lose that focus."
The government published a response to the report saying they "welcome" the committee's conclusion the EMA was not sustainable.
"We are aware we have undertaken these very important reforms relatively quickly and that this has resulted in some uncertainty", the document states.
"The delay in announcing the details of the new scheme was not ideal. However we felt it was important to consult fully on the new arrangments."
Chris Keates, general secretary of teaching union NASUWT, said the report highlighted "serious concerns".
“Since the publication of the report, these concerns have been further compounded by the fact that the number of enrolments for further education has fallen sharply this year.
“This is unacceptable and inadequate and there is growing evidence that we have a lost generation of young people, whose only prospect is unemployment.”