As previously mentioned, it is all about management of the scheme...
Here in NZ, prior to about 1999-2000, you could only get the academic portion of an aviation degree funded via loans... around $3000 worth of course fees per year... but the actual flying (something like $60k over 3 years) was out of your own pocket...
Then they changed the rules and fully funded aviation... this created the concept of 'Sausage Factories'... where schools were just trying to enrol as many people as possible (cue outrageous claims about flying jets after 18 months etc. etc) so they could milk the student loan funding...
This resulted in large amounts of dropouts with large loans and nothing to show for it, as well as new 200Hr CPLs with large loans who had no chance of getting a job (unless they were flipping burgers/pumping gas)...
So they changed the rules again... now schools are given X number of student loan placements for a year and they have to be more picky as the placements are reassessed based on student performance... ie. get a bunch of muppets in one year who all drop out/fail... and your placements get reduced...
This is why the schools are now running interviews/assessments and taking the cream... they have to be more selective about who they take.
Works out quite well from what I hear... Keen, dedicated and passionate people now have access to aviation regardless of personal circumstance...