Is it permissible to return the condemned items to my friend at school, or should they be returned directly to his father for fear of them not reaching their intended recipient?

There is no harm in repaying the debt to your friend at school or elsewhere, as long as there is no indication or strong suspicion of his betrayal, and that he will not deliver the money to his father. If such an indication or strong suspicion exists, then the debt must be repaid to your friend's father; based on the Prophet's (peace and blessings be upon him) saying: "The hand is responsible for what it takes until it returns it."