Both equity and debt have an element of moral hazard, and both provide some incentives to make the efficient choice about whether to get an education. A student taking on a loan for education (Australian style or otherwise) might make themselves worse off if their future income change from education is sufficiently low.
In my opinion, returns to college education are so high that the focus should be on having as many people go as possible, not on selection the efficient subset.
In my opinion, returns to college education are so high that the focus should be on having as many people go as possible, not on selection the efficient subset.