First, Corinthian College, which has closed its doors after taking its students' federal and private loan money. These students are now arguing that they should not be required to pay back their loans because they will no longer be able to acquire the rich Corinthian
In any event, unless legislation or regulation provides otherwise, the venality of the one from whom a service is purchased does not effect a borrower's liability to repay the lender who financed the purchase. In other words, unless a "seller" like Corinthian and the lender are in cahoots, the loan must must be repaid. This is even more the case when, as Adam Levitin explains, the federal government has made the loan.
Closer to home are the students of the Charleston School of Law, another for-profit institution, who may seek to have the South Carolina Supreme Court appoint a receiver for the school. Read the news account here. The remaining owners, who have been stymied in their efforts to sell the law school, have threatened not to enroll of 1L class in the fall. I know nothing about South Carolina receivership law but am skeptical that students would have standing to seek such relief.
In any event, times continue to be turbulent in higher education.