My wife has not paid on the student loan

For starters....are these federal loans or private student loans?

Secondly....has she talked to her lenders? Read her lenders website? For federal loans, there should be lots on information on deferments and forebearances. You generally can defer federal loans for economic hardship for 3 years. If she has not consolidated her loans, she might want to look into the Direct Loan Program thru the Department of Education. They offer an income contingent repayment plan that makes payments very affordable.

If these are private loans, then you might have more trouble. As a general rule, private student loans offer very little in economic hardship benefits. You have to call...they might be able to give you temporary help but if these are private you will need to start looking long term at increasing your income. If they default, you will be looking at being sued.

In either case, damage has been done to her credit that is going to take 7 years to repair. Nothing is going to remove the lates. However at this time, you want to be doing whatever you can to avoid default. Federal loans charge up to 25% in collection fees if she defaults on her loans....so do not delay in making the call!!

From what I understand some lenders might be willing to take those six months past due payments and add them on as an extension to the end of your loan. Ofcourse you'd have to start making your payments again immediately but it may be the best way to start to rebuild the damage you've already done to your credit.
You definately have some hard decissions to make. One idea that comes to mind is that with todays housing market you may be able to find a motivated seller and buy a home well below its market value. Maybe you could possably absord the college debt into your mortgage... If your not already a homeowner that is.