<p>“Banks wrote off $3 billion of student loan debt in the first two months of 2013, up more than 36 percent from the year-ago period, as many graduates remain jobless, underemployed or cash-strapped in a slow U.S. economic recovery, an Equifax study showed.” …</p>
<p>Hmm, Dave, are these true write offs in that the borrowers are not going to be pursued, or on paper, accounting write offs that the banks are making, having to sell the debt to collectors, or go to the federal government to get payback, and the borrowers will still be on the hook?</p>
<p>These appear to be “paper” write-offs, i.e. for tax reporting purposes. I don’t know how many people came to me to file bankruptcy because they were being sued over a loan (typically a credit card) that they said was “written off”. They assumed that it meant that they no longer had to pay. The students in the article will know if the loan is truly being written off if they receive a 1099 from the bank reflecting “foregiveness of indebtedness income”. Then they can deal with the IRS!</p>
<p>Would the banks write them off and sell them to a third party for collection which means there is still someone trying to collect pennies on the dollar?</p>