From IND's law about student visas:
57. The requirements to be met by a person seeking leave to enter the United Kingdom as a student are that he:
...
(iv) intends to leave the United Kingdom at the end of his studies; and
(v) does not intend to engage in business or to take employment, except part time or vacation work undertaken with the consent of the Secretary of State for Employment; and
Under those rules, one *should* leave when he finishes studies (and I'm guessing that would apply to people who drop out).
However, keeping that in mind, a lot of people change to WP (including myself) or HSMP at the end, totally invalidating point (iv).
Also, I knew a couple of people who dropped out and stayed the full duration of their student visa without studying (including exits/entries to the country without problems). My impression is that either the universities don't inform the HO of dropped out international students, or it might take a looong time.
Furthermore, when one quits a job under WP, HO usually send a letter (these days) that you have to leave the country in 28 days, and I have not heard that students get the same. Therefore, you could say you were 'staying around to look for another university' etc, whilst in the mean time applied for HSMP.
IND website ironcally posted the following today on their website (which might be of concern):
Information about overseas students
[22 April 2004]
INFORMATION ABOUT OVERSEAS STUDENTS
IND is keen to receive information about all cases of overseas students (not those from EU countries) who have either accepted a place at your establishment but have never attended, or who have dropped out of a course of study for no apparent reason. You need not notify us in cases where you know the person concerned has transferred to a course at another UK institution.
You can email us via the address below. Click here for details of the information we need you to include in your email.
icc7@ind.homeoffice.gsi.gov.uk
Again, Kayalami and co. should provide you with more factual advice, as you seem to have pointed out a few 'grey areas' in the matter.
