Michael Gove's replacement for the scrapped education maintenance allowance is a "rushed and ill-thought-through" reform that was unveiled too late for teenagers making decisions about study in September, according to a committee of MPs.

Michael Gove announced the abolition of EMA, which helped students in households earning under £21,000 a year, as part of the spending review in October 2010.

A replacement scheme of bursaries for the poorest students administered by colleges was unveiled in March.

In a report published on Tuesday, the education select committee warns that the changeover was poorly handled and funding allocated too late for 16-year-olds to make informed decisions.

The report says ministers should have done more to acknowledge EMA's impact on participation, attainment and retention, before they decided how to restructure financial support.

The MPs said they were not convinced that bursaries administered by schools and colleges would be fairer or better targeted than a slimmed-down version of EMA.

But the committee accepted that a change was inevitable. "The need to examine every area of public spending is not in dispute, nor is the need to make difficult decisions," the report says.

Conservative MP Graham Stuart, chairman of the education select committee, said: "Young people taking life-defining decisions at 16 need clear information on the support they may receive and deserve better than rushed and ill-thought-through reforms.

"We accept that changes and savings need to be made but the organisation of the change has been far from smooth. Decisions on how much will be available for distribution by each school or college have been taken far too late, and it is 16-year-olds who have suffered uncertainty as a result. That should not have been allowed to happen."

The MPs criticise the government's main argument for abolishing EMA, that 90% of recipients would have chosen to study without the allowance.

Proponents of this view argue the high "deadweight cost", in effect, becomes 100% once legislation to make participation in 16-18 education or training compulsory comes into force in 2013.

The MPs say the 90% figure may be a "rounding-up" of an 88% figure in a study of barriers to participation in education and training. The author of the study, Thomas Spielhofer, told the committee that the 88% included some for whom finance was a constraint if not an absolute barrier. He also indicated that the 12% who would not go on to study without financial support was a significant figure, and he described it as "a worrying statistic".

Gove's decision led to public protests by further education college students. The MPs' report also finds that there is a strong argument for saying that 16- and 17-year-olds subject to compulsory study or training should be eligible for free or subsidised travel. It also says there is no logic in making free school meals available to 16- to 18-year-olds in schools but not in colleges, and says that equal eligibility should be the medium- to long-term aim.

Nearly 640,000 students took up EMA in 2009-10.

Sally Hunt, general secretary of the college lecturers' union the UCU, said: "We are pleased the select committee has acknowledged the complete mess the government has made of the EMA. Ever since the government started cherry-picking research to drive through the end of the EMA it has been clear to us that thousands of the country's poorest teenagers would suffer. It was insulting to hear Michael Gove dismiss the EMA as a deadweight cost – something that has now been proven incorrect."

A spokesman for the Department for Education said: "We have always been clear that we will not allow financial issues to be a barrier to young people staying on at school or college post-16.

"We are pleased to see that the committee acknowledges the government's rationale for closing the very expensive and centralised EMA scheme. This decision was made based on thorough analysis of all the available evidence and we have worked with representative bodies such as the Association of Colleges throughout this process.

"We firmly believe that a more targeted approach is needed and it is right to put money in the hands of heads and college principals, who know their pupils best. This is precisely what the new bursary scheme will do."