[dragonwriter]

> In the case of student loans, the answer to the second question is "the U. S. government will pay it, in cash".

No, it's not. While private student loans are still offered (sometimes, by predatory scammy for-profit schools themselves), none of them for quite a few years have been government guaranteed.

The former government guaranteed loan program has for some time had exactly one lender by law, the federal government itself.