It’s not flawed. It actually benefits MOST students because most students don’t earn that much money until their junior years of college…and if that is the case, the income is never used for college financial aid purposes.
Another thing…if you have those earnings in the bank when you file a FAFSA, they will be considered an asset. And student assets are assessed at 20% of their value for calculation purposes.
But really…instead of complaining about this…why can’t you be grateful that you have these earnings to help you with college costs.