The other parties to the deal, namely the banks and schools, are far more culpable than the students. Let the banks and schools sue each other over the money owed. They are the ones that bought the laws and regulations than enable them to sell duff diplomas and finance those duff diplomas.
The school does not exist anymore. There is no one to sue and the money is gone, regardless. And if you pin it on the banks then either loans will get more expensive to account for the added risk of potentially having to foot the bill for bad schools or will stop lending altogether, making it harder for students to go to school.
Why should school loans be made by investor-owned banks? Don't tell me it's because the private sector is better suited at selecting against investor-owned schools. So, yeah, let the creditors take it in the pants.
