A year is A LOT of time, and you have to explain why you lost a year later on.
Also, even in "free" education systems, some taxpayer is going to ask "why the hell am I paying for 2/3 of crappy students, can't you just raise the bar at the beginning, and only accept the top 1/3?"
A year is a lot? Then what is 5 years, a lifetime?
Let's not fool ourselves, a year is NOTHING, it passes as soon as it arrives. There is nothing bad with people "loosing" a year or two, or perhaps even more.
In an ever more pacing world, we should readjust and look back, some might "sacrifice" a year, but they also learn valuable experience so not all is lost.
Today, when people's work time can last 50 years easily, what is a year or more?
Let people "search for themselves". Let them try out the hard things, let them explore and value experience, realize if something is for them or isn't.
In the end, we learn most from our mistakes, not successes.
It is not that they do not learn anything during that year. Also, many of them later got admitted to some 'easier' school and got their credits transferred.