cantoresq,
M in Israel, if one uses to stolen money to support his limmud Torah, it is a mitzvah habah b’aveirah; just like using stolen money to buy Arbeh Minim. If one uses public funds to support his limmud Torah in those instances which you acknowledge it may be hashcafially inappropriate to do so, what else is it, if not navel birshut haTorah? Halacha may technically allow it, but it is disgusting.
I would like to get a better understanding of your position.
Suppose a man with a family worked as a janitor and received minimum wage. Would you be opposed to this man receiving government assistance to live?