There is absolutely such thing as a co-borrower. It is another entity that would benefit by the the primary entity receiving a loan. Often times the co-borrower is a family member who would benefit from happiness at seeing their son/daughter/wife with a loan. Other times it is a government entity who benefits by having certain of their citizens receive certain types of loans. Other times it is business partners who rely on the the primary party and will benefit financially if they receive a loan.
In this case it would be a college who is benefiting from tuition money that otherwise wouldn't be coming in.
The student could walk away and the uni has to pay the bill.
Why would a kid who has been properly educated and has obtained a useful degree decide to walk away from a loan and ruin their credit?
There is no co to it. You borrowed the money and gave it to someone else. If you are lucky, they pay for it. There is literally no difference legally between co-signing a loan and taking out a loan yourself.
“Why would a kid who has been properly educated and has obtained a useful degree decide to walk away from a loan and ruin their credit?”
Because they know the co-signer(the uni) will pay it to keep from ruining their credit. So it is essentially free money. The bank won’t ding their credit so long as the loan gets paid off by someone.