The Australian government is considering a plan to cancel federal funding for students who fail to complete their courses on time.
Student movements would be tracked by the new Higher Education Information Management System, which would monitor the time they spent at university, their academic record and loan history.
Universities would receive A$20 million (£7.7 million) to implement the system.
Tuition costs are subsidised by the government, and students are required to meet between a third and a half of the full fees.
The government is also said to be planning to link university teaching and research grants to a requirement that tenured academics are hired on individual contracts. But the National Tertiary Education Union said any attempt to remove tenure from academics would be met with industrial and legal action.