Can grandma lose benefits?

Nope, your friend can only ruin Granny's credit. SSI Benefits and Medi-care not connected to Granny's debt - nor her bank account, nor to any property she may own or rent. Be it known, that if this "friend" fails to make these payments, on time and totally, Granny will have to make them herself, and if she has no money, they'll take the automobile and auction it off and still come back to her for the rest of the debt.