"No one knows the origin, exactly, of when it became the custom to cut the shirttail off of a fledgling student pilot's shirt, but it's a tradition that's still practiced by thousands of instructors on the occasion of the student's first solo flight. Some say it's from the old days of open tandem cockpits, where the instructor sat in the rear seat and the student sat in the front seat. To get the student's attention, the instructor would lean forward and tug on the student's shirttail. Solo flight equals no instructor, hence, no need for shirttail tugging."
Thats what fs2004 says about it.