Again, worth noting: there is no risk to the taxpayers for the balance of your loan. You cannot discharge student loans through bankruptcy, and the government can garnish your wages, tax refunds, and social security to repay them.
The balance of the loan is different from what you (as a lender) have to put the loan on the books for. Even if there is no way to legally discharge it, if it's unlikely that the loan will be paid back (or part of it), you have to value it for the amount you expect to receive.
But you can still discharge them through death, can't you? So there's still risk of non-repayment, if the borrower stays poor until his/her death.