In your promissory note, you agree to only use the money for "qualified" educational expenses (books, rent, etc.). They really have no way of checking what you use the money for. But, if they find out one day ... you would be in violation of the contract. In which case, the lender may want to end the agreement, take legal action against you (assuming they can prove you violated the contract), and take their money back.
Student loans are distributed directly to your school, where they take out tuition and cut you a check for the remainder. How do you plan to intercept the school loan before the school cuts their part out?