Visa approved but unable to use due to loan problems
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The generic name for this type of situation is 'Change of Circumstances'. They do not count against the person if they are properly declared and not abused.
If your friend wants to play it strictly by the book, you can advise your friend to file a variance with the German consulate that issued the visa, and explain that the loan did not come through as planned and that they will not have the funds to sustain themselves. The German consulate will revoke the visa without prejudice and your friend's credibility will be enhanced the next time they apply for something.
On the other hand, if your friends arrives in Germany, they will be examined to assure that they have the necessary funds to support themselves and to pay for their courses AND to finally return to their home country. If they are unable to satisfy the border official that they have the means, then they will be vulnerable. Moreover, they will need to think up a convincing reason why they travelled knowing that they could not accomplish the purpose of their visa.
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