The reason that any bank that sells debt would attempt to avoid this kind of thing happening should obvious. Moral hazard. If a debtor can refuse to pay and then only pay what the bank really then thinks the loan is worth (with few if any penalties), then every debtor is going to do that.

Obviously, OWS is doing this as a political statement that the debt system in the US is corrupt, unjust or something. It does seem like things such as education shouldn't throw a kid into life-long debt from the get-go or the benefits should be more, uh, clear.

The student loan system today generates a huge number of defaults. The contradictory situation where the banks naturally write down this debt but work hard to keep the written-down out of the hands of the debtors may be an Achilles heal of the system.