Mr Tehan said the change, expected to impact 2500 people per year, was geared at preventing students who were not academically suited to their course from racking up enormous HECS-HELP debts.

"We want universities to work with students if they're failing subjects. To say to them, 'Look, is this the right course for you? Do you need help and support to pass your courses? Or, is it better that you think about doing another course, which is more in line with where you want to go, what your skill sets are, your educational background, and therefore, you know, this is a much better option for you'. Because, the last thing we want is students doing a course, not getting a qualification, but, then, being left with the debt to have to pay off that course," Mr Tehan said.

The government's motivations here are not just altruistic. The Department of Education and Training estimated in 2018, 17 per cent of new HELP loans issued are what were described as "doubtful debt" - AKA debt expected not to be repaid.

In recent years, the government has moved to tighten the net and recoup more of this debt. However, annual HECS-HELP lending has doubled in real terms since the number of government-supported university places were uncapped in 2009.

The reform was designed to improve equity of access to tertiary education in a system which had historically locked out disadvantaged groups - and it worked.

A 2014 review found the changes had resulted in a substantial increase in the number of students able to attend university, especially from groups who'd been previously locked out.

The flipside was more students were entering poorly prepared and at considerable risk of not completing their courses. Attrition rates were found to be highest for students entering with a low Australian Tertiary Admission Rank or ATAR.

A June 2019 Productivity Commission report found these students had a drop-out rate 57 to 70 per cent higher than other students, and at age 23 were less likely to be in full-time employment. They also had lower average weekly pay than university graduates or people who didn't attend university at all.

"Consideration should also be given to strengthening course counselling for students that encourages them to 'fail fast, fail cheap'," the Productivity Commission said.

"While a benefit of the demand driven system was that more students could try university and see whether they were well suited for it, early exit of those that prove ill-suited, despite remedial support, will mitigate the 'debt and regret' problem."

Instead, rather than help them, the government has tried to dress a stick up as a carrot and opted to punish people who - according to the Productivity Commission's analysis - will be least able to pay it back.

A qualification is still one of the best ladders out of poverty. Making it harder to get one will do little to assist the cohort most in need of and extra rung.

Figures from the Australian Bureau of Statistics on Thursday showed the youth unemployment rate hovering around 16.3 per cent. After the 2009 Global Financial Crisis, higher education applications spiked by 5.6 per cent.

Under a worst-case scenario, the Department of Education, Skills and Employment predicted another 20,000 university places could be required per year if the youth unemployment rate hits 30 per cent.

This change could not come at a worse time for young people, who have borne the brunt of the coronavirus-induced economic crisis so far. What the government should be doing, instead of introducing policies that will further punish this cohort, is attempt to understand why so many are struggling in the first place and work on breaking down those barriers that make it harder for the most disadvantaged to succeed at study.