> But that loan money was going to be used to pay the school; and presumably if the student doesn’t have that loan money, they ain’t gonna be paying (or attending, because they can no longer afford to do so). So schools should care.

I don't think this is a correct model of the situation. As far as I know, it isn't the case that there's a fixed budget for student loan disbursals and all of it will go to some school or other unless it gets stolen. Rather, if more people ask for student loans, more money gets disbursed, and if fewer people ask for loans, less money gets disbursed. So the amount of money the school gets wouldn't be affected.