Forget about what problems (about entitlement, etc) there are for a second, what exactly needs to be done to fix them? That's the important bit
The abuse of SEAS is not an isolated case in systems designed to aid the disadvantages. Youth allowance, FTB and a range of other government aids are abused, and many people qualify for these aids when they are not at any disadvantage (many of my friends included). That is not to say these government aids should be abolished, there are many disadvantaged people in need for these aids, but the criteria for these systems must be overhauled.
Say, for example, the financial independence clause for youth allowance. One way to gain this is by earning $X in a year, with the intention to support students who live out of home, studies full time, and have to support themselves by employment because parental support is not available. However, many students qualify while still living at home, supported by parents, and were not under hardship to start with.
The fix for SEAS lies in a fix for YA, FTB and etc.
I like what Gillard has done for YA, which is to remove the earn $X/18 months clause in YA, and force the applicant to show that he/she must move away from home.
You also correctly pointed out several pages back that FTB is seriously abused at the moment.
If I had to redesign SEAS, I would give a ranking to SEAS applicants such that the $$ of welfare they receive modifies the ranking of a SEAS applicant. This is flawed in the sense that it's hard to quantify exactly how disadvantaged someone really is, and the $$ of welfare is not the perfect indicator. However, this at least reduces the abuse from families who are receiving $1 from FTB being considered as equally disadvantaged as a family receiving $500 from FTB.