Many Americans are unable even to make a dent in their college loan debts. Of those who borrowed in 2009, over a quarter owe more now than they did at the start.

Eventually the lender concludes the loan is uncollectible and forgives it, but this counts as taxable income, which is taxed at a substantial rate and the poor victim can't possibly pay it.

The tax debt must be smaller than the school debt. It might also be easier to eliminate via bankruptcy, though I don't know.

The lender could reduce the resulting tax debt greatly by forgiving the debt a little every year — as if it were being repaid — because that way it would not put the borrower into a high tax bracket. But I wouldn't assume they care enough to do that.