> So where's the real problem? For every person like my daughter, there are lots of people who spend six months, and end up not making enough money to pay back the ISA.

Isn't that a feature, not a problem? The education institution has a strong incentive to actually improve the earning potential of its graduates. This is in contrast to institutions that get paid upfront, which have no such incentive. Once you've forked over the tuition they're getting paid regardless of how well its graduates do in the workplace.

I think the learning here is that institutions offering ISAs need to be more selective with enrollment.