Funny you should bring up equality, our current system is anything but (speaking about universities specifically).
University is (has been) a place where people who are smart and work hard get good grades. People who are smart and work hard also tend to do well at life (generalisation).
My recent experience at university was that the people who shouldnt be at uni are well supported (to equalise things) and seem to tie up the most time of the lecturers. Lecturers are incredibly frustrated with the idiots at university (there have been some well publicised incidents). A degree now means very little because every idiot can get one, so people do more post grad, which takes time that they could be out earning/ gaining experience.
Make uni harder, pay people who excel at and reward those who complete it. At the same time better fund the universities and adjust course costs by their social benefit. Doctors should have to have high grades etc but not have to pay too much to study. Lawyers, well the less of those we have the better
If people arent learning the life skills they need to live at school then we have a whole other problem we should be dealing with first. We shouldnt be making it easy to be a student just because they cant be bothered working.
Anyway perhaps this is a little too specific to be applied to the entire universal student allowance discussion. On that topic my point is that it will be abused and offers no real benefit to society restrict uni courses to people who work hard and make their fees zero instead.