think fraud is going on

we need some advise!!!!!.. my wife enterd a Bussiness school,, and attended for 4 months,,,she asked for a 2 week leave of abstance for a medical surgery,,, they said no problem,, the day she got back after the two week abstance. they told her she is being exspelled from the school.. now,, the school has her loan money for the course,, and now the loan office wanted the loan in full,, or they will attack our income tax,, my question is,, why should we pay back a loan with no education ,, the school defaulted the loan,, she had full attention to finish the course,, isnt this fraud ??what actions can we take??,, i was told by the state loan office,, that this is like borrowing from a bank to buy a car,, if you buy a lemon its your problem ???,,, this doesnt sound right!!! please help,,

She contracted with a lender to promise to repay the loan, if the lender would provide money on her behalf to the school.

The fact that the school kicked her out does nothing to get rid of the debt that she owes to the lender.

In other words, she still on the hook with the lender.

If she feels she has a bone to pick with the school about the expulsion, she needs to pursue that.

But whether she's successful in appealing the expulsion will have no effect on her obligation with the lender to repay money paid on her behalf.