The Department of Education issued the loans. They should be able to decide if they want to collect them. The money has already been spent so the only "cost" is the opportunity cost of collecting. So it's not an appropriations issue.
With the expectation that they will get it back. Its not like they bought 400 million dollars with of gummy bears and they are all gone anyway.
It's not the DoE's money, it's the taxpayers' money. No, the DoE should not be able to unilaterally decide that it is no longer accountable for it. There is a proper channel for that sort of decision, one which (in theory, at least) includes the input of the taxpayers. It's called Congress.
If it’s not paid back then regular people need to have their tax money diverted from hopefully useful things to pay for this.
Sure it’s great if every random government agency can spend unlimited money. Well at least until we become the next Venezuela.