Australian students will be barred from receiving government subsidies if they take on too many subjects or do not successfully complete at least half of them under unveiled by the federal government.

Universities could also render students ineligible for government benefits by completing parts of their loan application forms.

The draft legislation gives effect to an overhaul of fees and subsidies announced by education minister Dan Tehan in June. His reforms are designed to bankroll an extra 100,000 university places while aligning funding to course costs and reducing fees for degrees catering to occupational growth areas.

But the legislation also contains many provisions that Mr Tehan had not flagged, apparently aimed at minimising taxpayer exposure to students likely to fail.

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Universities, higher education analysts and other stakeholders have been given to assess the risk of unintended consequences from these measures, with feedback due on 17 August.

Australian National University policy expert Andrew Norton said it was not uncommon for draft legislation to contain surprises. “But it’s not usually something completely unrelated to the original policy,” he said.

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Professor Norton said there were grounds for more scrutiny of “persistently failing students” who accrued debt with no realistic prospect of getting a degree. “That does seem to be a situation where the administrative systems are failing, and the students – and the taxpayer, for that matter – are incurring needless cost. But whether this is the right way to go about it, I’m not sure.”

One of the proposals would stop students attracting government grants or loans for subjects that raised their study load to more than twice the amount attempted by their typical full-time peers.

Bachelor’s and higher degree students would also lose access to government subsidies once they had attempted eight subjects in the same course at the same institution, and failed to successfully complete at least half of them. For diploma and other sub-bachelor’s students, this provision would kick in after they had undertaken four subjects.

Professor Norton said he was not confident that this was the best way of dealing with students he termed “fake fails” – people who had enrolled and subsequently lost interest, without understanding the “census date” when they became liable for debt. “They’re not coming to class but have not gone through the paperwork of disenrolling themselves,” he explained.

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An alternative would be to oblige universities to “weed these people out”. Other provisions in the draft legislation might impose such obligations on universities, Professor Norton noted.

He said there may also be situations where students could quite reasonably take on two full-time study loads. “Given that the academic year is basically only six months, it’s quite plausible that you could do two in one calendar year.”

The draft legislation also saddles universities with “genuine student” rules that were imposed on private colleges in 2017. They include banning providers from offering certain enrolment inducements, misrepresenting the nature of student loans or filling out parts of loan application forms that students are required to complete.

Professor Norton said such measures stemmed from the widespread abuse of the Vet Fee-Help training loan scheme several years ago. “Some of these provisions are banning things that never happen in the higher education sector anyway, so in that respect they are harmless – albeit signalling a high level of distrust.”

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john.ross@timeshighereducation.com