Except that government workers aren't robots, they too are real people with real common sense, but they are, as you say, tied up in red tape and there isn't a damn thing they can do about it.
I like the idea of a private agency being able to say "yeah, you've blown it...no more free ride for you" but then you get into personalities, it becomes subjective.
A federal (so I'm sure is true for other govt agencies) regulation states that we are not allowed to treat any student any differently than any other...so if I LIKE someone I can't push them to the front of the "line" and if I don't like someone I can't push them to the back. It's the ONLY way to assure that it's fair and unbiased.
Though it hardly ever seems fair.
I've seen too much and have become quite jaded.