Who is paying for this? The government doesn’t own the debt, it just insures the loans. The schools don’t own the debt. Some bond investor does. Are they paying for it? Are they taking a loss, or is this a giant payday for the high-risk tranche, as if nobody defaulted on these super-high-risk loans, giving these shady school bonds the best returns in the business. When the government intervenes, the markets stop working. If the schools failed the students, and the government doesn’t bail them out, they’ll default and nobody will buy loans from the school. Problem solved.