Nice try, but not true - you get the loan, you can do what you want with it as long as you stay in school...rent, spring break vacations, food, entertainment etc. none of that has anything to do specifically with education.
Some loans go directly to the schools. Others do get disbursed to the student. But you said a key phrase in your own comment: "as long as you stay in school". Money is fungible. If I get paid $5,000 in student loans and use that to buy a computer, but then I have to pay $5,000 out of pocket for tuition, that is identical to me paying for tuition with the student loans. The second I decide to stop paying tuition, the loans stop as well. So it doesn't matter what a student spends the check on directly, as long as they're using that money and paying tuition, the student loan is being used for education.