Answer
(Fatwa: 601/596=M)
A debtor can be given zakah money. The poor students of a madrasa also can receive zakah. After giving the zakah in possession of the poor, zakah will be valid. But, in the above-mentioned case it is advised to give your debtor friend something from the zakah amount so that he can pay his debts and you receive the reward of helping your friend. Also, keep on contributing the madrasa as well with remaining zakah amount so that the needs of the poor children are also fulfilled. When Allah has given you so much wealth you should help your friend with your money as charity and nafli sadqah as well.
Allah (Subhana Wa Ta’ala) knows Best
Darul Ifta,
Darul Uloom Deoband