Fuck the word taxpayer, it's a lie hiding in a literalism. It pretends that people are paying for some service and they could stop. No. Society, as individuals on behalf of the whole, has responsibilities. One of those is to pick up the tab when people's lives have been ruined through no fault of their own.
The whole "small government" thing has just been people blowing off their responsibilities.
There's a difference between a stupid decision and being defrauded. A debt incurred as a result of fraud should simply be null and void. Probably the best way to do this is to make it the fraudster's debt, and not the victim's.
I don't think you understand how these schools sell their "education" to people who are ignorant of higher education. They literally targeted people who don't know any better and promise that they will make $75k out the gate.
The whole "small government" thing has just been people blowing off their responsibilities.