With guarantee repayment, the loaning authority does not need to worry so much about A) the school, and B) the ability of the student to repay the loan.
While it is true that some would take advantage of the situation, it is also true we are now creating indenture servants.
My question would be, is a contract valid if one party deceives the other? I guess the courts are going to have to decide.
Second, if you are so concerned about “deadbeats” then do away with bankruptcy and open up debtor prisons again. That should make you happy.
I agree with your general idea but the problem is that this situation is no different than any other in which someone who buys something chooses to not make an informed decision about said purchase beforehand, with borrowed money.