Many countries have implemented policies to prevent or combat educational disadvantage associated with socioeconomic factors in the students home environment. Under such policies, educational institutions generally receive extra support from the central or local government. The support is normally based on indicators available in the home environment of the children, mostly family-structural characteristics. In the Netherlands, the core of educational disadvantage policy is the so-called weighted student funding scheme, which awards schools with disadvantaged students additional financial resources. When this scheme was developed in 1984, three indicators of disadvantage were selected, namely3A parental education, occupation, and ethnicity. Analyses conducted at the time established a predictive validity estimate of 0.50, amounting to 25 percent of explained variance. Nowadays, some thirty years later, the funding scheme is based on only one indicator, namely parental education. Analyses performed on data collected in 2014 show a validity estimate of 0.20, thus accounting for no more than four percent of variance. This dramatic decrease of the indicators predictive validity shows that the empirical basis of the Dutch weighted student funding scheme has become highly problematic. It is suggested that instead of employing family characteristics as educational disadvantage indicators, the actual performance of students based on test achievement and teacher observations may offer a more valid alternative.