Start here and read about disability discharge: https://thecollegeinvestor.com/22781/student-loan-disability-discharge/

It would apply apply to her portion of the loan – but both of your names would still be on the loan. The remaining balance would just be your portion – principal, accrued interest, and fees.

No, there will be no forgiveness of your interest and penalties. In fact, once you rehabilitate, those capitalize into your loan.

If you continue to ignore it, it will just grow, and the government will continue to take your payments – Social Security, tax refunds, etc.

To follow up: You mention disability discharge. While I am not qualified for this, my ex-wife is legally disabled. This being the case, if we were to jointly agree to rehabilitate the loan, would she then be allowed to have her portion of the loans discharged? If so, exactly how would this work? Would the government then recognize each of our separate loans allowing her to discharge her portion? Another reason why I have been unwilling to consider rehabilitating the defaulted loan is due to the ridiculous amount of the current balance. I borrowed less than $35,000, my ex less than $45,000. When I last checked, due to the interest and penalties, the loan balance was in excess of $300,000. If rehabilitated, would there be a willingness to forgive some of the interest and penalties in order to make it feasible for us to consider the rehabilitation? If so, who would make this decision, the company that bought the debt or the government? As it stands, she has absolutely no incentive to pay her portion of the loan because the only money it costs her is a small tax refund each year (as she is “disabled”, and making little money), since I am the one on the hook for the bill. I have little current incentive because the balance might as well be a billion dollars, as I would have about the same chance of paying back that amount as I am to pay back $300,000+.

Now, if you both have good credit and qualify, some credit unions might allow you to split the loan into each of your names. It’s rare, I’ve never seen it actually done, only heard this as possible.

Remember, if you do refinance, you now have a private loan that you’re obligated too.