Well, since the federal government appears to be making a sizable profit off of their student loan business, I'd say that this $7.7B will just come off their "balance sheet".

http://www.politifact.com/wisconsin/statements/2015/oct/01/e...

A federal law was passed in 2010 that required all student to originate from the DoE, giving them a monopoly on the juicy, high interest, high balance, zero risk loans given out to millions of Americans each year. Because of this, the DoE rakes in billions a year in profits from student loan interest.

So this $7.7 could hit their bottom line and barely move it. http://www.bloomberg.com/news/articles/2015-12-11/a-144-000-...

It's possible that this was the first step in a plan to gradually unwind the student loan crisis. I'm sure that changing the repayment rules while commercial lenders owned most of the student loan debt would cause a massive backlash.

Sallie Mae or US Treasury - I am sure the banks would be made whole again. I am of mixed views here, because a Student Loan is technically is a permanent burden unlike other loans.

Federal student loans are guaranteed by federal government. So the federal government is losing the $7.7 billion.