The decision has been made by the local authority which believes it will save more than £10,000 from the change.
Currently, assistance with the cost of transport is provided by the council for post-16 students who are living in Peterborough and are enrolled on a full time course.
Students with an Education, Health and Care Plan, or with exceptional physical, sensory or medical needs that have a significant impact upon their ability to travel, may be considered eligible for transport assistance as well.
Parents were expected to pay £600 per year, while discretionary seats (for students who are not entitled to transport assistance but want to purchase a spare seat on transport contracted by the council) were also available at £115 per half term.
However, these charges will now be waived.
The council said this related to Public Service Vehicle Accessibility Regulations (PSVAR).
Legislation was brought in to make it a criminal offence to use a non-compliant vehicle for home-to-school journeys, although time exemptions have been made to this.
However, it is unknown whether those exemptions will continue.
The legislation stipulates that all fee-charging shared vehicles, designed to carry more than 22 passengers and providing a local or scheduled service, must meet accessibility standards.
The council believes it would cost £33,564 to purchase three PSVAR compliant vehicles so it will be £10,324 cheaper to offer free transport to students who meet the eligibility criteria through different methods.
It said: “Officers have looked into whether PSVAR compliant vehicles can be provided for post-16 students who pay the parental contribution. However, the additional expenditure of doing so (an additional £11,188 per vehicle x three vehicles) exceeds the expected parental contribution income of £23,240 by £10,324 and there is still uncertainty as to whether PSVAR compliant vehicles can be obtained or whether the current situation will change again.”