It is more complicated than these two extremes... On the one hand, the school may have told the student what he or she wanted to hear and carefully shaped what they said to omit damaging facts about some programs. On the other, the student may have only heard what he or she wanted to hear and felt that "having a dream" was sufficient to find an answering universe that should help them fulfill that dream. The student would not buy a car without a lot of checking, but somehow bought the sales pitch without, it seems, much checking. The school gets an unfair advantage by calling a salesperson an admission officer and the fact that schools are expected to be places where people are taught.
The school also benefits from the fact that most people never think of things like credit transfers, assuming that "college is college" even when some programs are closer to 13th grade and often filled with students who did not excel in K-12. I have taught PhD psychology students who could not read or write past, about, fourth or fifth grade, who were incredibly angry when they did not get good grades, often arguing that they believed in themselves and would succeed because they had dreams. Both school and student are trying to get the best outcome for themselves, recognizing that neither is bringing an A game to the table. Faculty are pressured to pass substandard students, admissions have to bring in fresh students, school wants to make a profit, student wants a degree that helps them get ahead without having done the groundwork to know what they are buying or, often, to succeed once enrolled because they have a dream or "believe in themselves".
So, it seems that everyone has an excuse. The sad thing is that it results in bad outcomes for the student, disheartened faculty, bad reputation for the schools so that they can only get even lower classes of students in many cases, admissions folk who are worried about their jobs and feel guilty about some of their enrollees, etc. Forgive loans and let students keep the credits earned and only the taxpayer is on the hook (student has the crummy credits but can claim a degree, and school spent their money long ago)
The other people who benefit are the top levels of management who do a poor job of leading, get whatever pay and benefits are on offer, and move to do damage elsewhere when they have siphoned off all the money that they can (see Todd Nelson, Craig Swanson, Goldman Sacs, etc.).