Of course students will get their loans. Most state-run universities now rely on tuition to cover a good portion of operating expenses. So, States and the Fed are not going to let the university system fail. However, don't kid yourself. Banks are not buying and putting up the money for loans from private student loan originators--and these orignators will be out of business soon. So, if you think you have a loan through one of these guys, you might want to look to the FEDS now. This will be a small problem for those kids that think they are getting this money. But, as stated earlier, the feds will not let the education system fail and there will be a bail out of some sort to ensure that people pay their tuition.