Thanks for the clarification, but it sounds like the net effect is exactly the same: bad loans are made, money is lost, the taxpayer is forced to subsidise the indiscriminate purchase of education.

As always with such schemes, there is an ongoing push to implement them in as complicated and opaque a fashion as possible, to try and hide the naked fact of what is going on. So no one will admit "we take money from taxpayers and make loans no sane private investor would ever consider," they'll just talk about FDCRP-approved rates this and Fannie Mae-that and fiduciary-backed iron bond multiplexing high-yield 7.5% rederived blahblahblah.

Same bullshit that happens when bank deposits are federally insured.