The entrance score is nothing do do with ability or academic strength - its a reflection of at what point the demand for the course cuts out. If the course was in high demand with high achievers the score would be higher, but it isnt so as long as you have the minimums to get into it (passes in maths, english etc) you can get in. It just so happens the level to do that is around the 50 ATAR but that does not mean the applicants are not educated enough to do the course. In my time at school most people in that 50 band were capable enough - maybe not academically geared though.
The money gets paid back - they could do the degree, hate flying and go be a bank teller - they would still pay it back as soon as they start earning enough. If they are dreamers they pay it back the same as someone who goes on to fly shiny big things.
I think it being a degree is a but if a pull as well, but no more than some tourism degrees are just surfing lessons, or some IT degrees are nothing more than glorified microsoft courses. I think in as far as it is further vocational eduction it should be supported provided it operates like HECS and the money comes back to the taxpayer once they start earning.
It stops no-one taking the working through Coles or Maccas route to pay for the $200-300 an hour they need for 150 hours to get a CPL. As long as the outcome standards are the same, what is the issue? Its money going into aviation and its supporting the industry.
I would argue if you have someone geared to want to be a pilot why shouldnt they get some assistance with the training costs, with conditons. If you remove the degree part it would only cost $30k or so, why can't that be under a HECS/HELP type scheme? Let the work hours be paying for food and rent rather than poverty to pay for increasingly expensive air time.