This may apply for personal loans, where real money is given up; but, it's not really correct to call a bank, the originators of most private student loans, as far as I know, a 'lender'; as, banks don't lend their own money, but create new money through promissory notes.
It is 100% correct to refer to a bank as a lender. This is standard use of terminology.
If you check the Promissory Notes, I'd guess they probably don't say "lender", except as possibly an alias for a definition that is not equivalent to the standard definition -- wherein, one forgoes actual physical property (cash, for example) for another's use; with the expectation that the property will be returned at some point (possibly with some form of payment to compensate for the real loss of property).
Edit: Do you think Wells Fargo has myriad $100k bundles just sitting around waiting for students to take? I don't think so. They use their power to create new money, rather than loan out the entire principal from their reserves.
This is absolutely, completely, 100% wrong. Defaulting on a loan means that the borrower has failed to repay according to the agreed-upon terms.
> Some people never make enough money to pay it off, after which the government will pay the loan off after a few years. The lender gets payed anyway.
This isn't really true either. The lender is not guaranteed to be paid their principal back.
> These are risk free loans for lenders.
If these were truly risk-free, then the interest rate on private student loans would be roughly equal to the current actual risk-free rate of investment (because any new lender could always capture additional loans by undercutting their competitors and still make a profit).
Except, that's not true at all. The interest rate on private loans is quite high. In fact, it's significantly higher than the interest rate on mortgages, which are loans backed by collateral that can actually be seized.