The Government is potentially spending up to $53 million a year on its flagship fees-free policy for students that have either withdrawn from or failed tertiary courses.

About 20 people who applied for fees-free this year could face prosecution for deliberately trying to access funding they were ineligible for, according to the Tertiary Education Commission.

According to the latest numbers, released last month, 41,700 students had signed up for fees-free, expected to increase to about 50,000 for the full 2018 year.

President of the Tertiary Education Union, Sandra Grey, told Kate Hawkesby the policy wasn't necessarily just about increasing the number of students attending university. 

"Making sure we have a much more equitable system so people are taking the chance to try out an education and get a start, so I think there has been a misconception about what fees-free might do."

"We need to see some figures to see whether we are seeing more first and family going to university or polytechnic now because it's those people we are trying to encourage. We have seen a closing down of our system over the last two decades as fees have gone on students." 

She acknowledged they might not "have the formula right yet" but said it's an important start.

"We have always had difficulty retaining first-year students. It's actually a really complex thing to go and study and what we have seen over the last few years, is the cost of living has gone up for students [and] people are dropping out, they are struggling with the economic costs."

"While the fees are free, they are still not getting the student allowances, they have really high rents and I know, certainly in the major cities, students are really struggling to get accommodation, so it's all of those things adding in." 

"We might not actually have the formula right yet, as in we are not providing enough support for those students, we are not giving them what they need to live and survive, but I don't know yet whether the percentage of dropouts is any higher than other years when people are paying fees."

"It's hard to survive as a student these days and people get into it and then realise they can't afford to pay their rent and then drop out and get jobs."

Grey said the lack of funding for tertiary education institutes is also exasperating the situation.

"We are underfunded, at the moment, by about $3 billion over the last decade that means that we aren't putting the money into mentoring work that we should be putting it in to."

"We have cancelled a whole lot of student support roles because they are seen as an extra and nice to have when in fact for first-year students...those things are really critical to success."