Around 200,000 teenagers are to receive £100 bonuses this week, under a government scheme which rewards them for continuing in education.
Students get the bonus for good attendance and effort
Some 270,000 students in England are given up to £30 a week in means-tested Education Maintenance Allowances.
Of these, around 75% had good enough attendance and effort levels last term to pick up the extra payments, which will be repeated in July and December.
However, Liberal Democrats called the bonuses - totalling £20m - "excessive".
EMAs were introduced last September to improve staying-on rates at 16, on which the UK has one of the worst rates in the industrialised world.
Teenagers whose household income is under £30,000 receive weekly payments, rising to £30 for the worst-off.
The Skills Minister, Ivan Lewis, said: "With this extra cash, young people who might have been tempted to drop out of their courses into low-paid jobs after the New Year holiday have been given a huge incentive to stay on."
He added: "The bonus is an important part of our overall EMA package and it's extremely encouraging that so many students have qualified for their first payments."
But the Liberal Democrat education spokesman, Phil Willis, said: "There are significantly more important things to do with £20m than give young people a Christmas bonus."
He added: "The EMA is a good idea to support students staying on in the sixth-form or at college.
"But to give these bonuses for literally turning up seems to be taking the idea to an unacceptable extreme."
The EMA scheme is being extended to include teenagers who want to take short courses.
Previously it applied only to those wanting to study for longer - usually two-year - periods.
Conservative spokesman Chris Grayling said: "This is another blatant example of the government trying to fiddle the figures.
"Bribing young people to sign up for courses they may not complete might make ministers' targets look achievable - but they do absolutely nothing to help solve this country's chronic skills shortage."