If your wife co-signed the loan, she is joint and severally liable for the amount owed. That means they can collect/sue/enforce the debt against the ex, or your wife individually, or both at the same time. It is the creditor's decision to make. Right now I assume it is more convenient for the creditor to collect against her, rather than the ex.
So, what options do you have if the ex fails to pay?
1) Pay the monthly amounts to avoid action by the creditor, and to keep your wife's credit intact. This also has the benefit of keeping interest, penalties at a minimum. At the same time, you must hound the ex to pay the bills.
2) Cut your losses. Pay the full amount owed to the creditor. Sue the ex in small claims for the maximum amount allowed. Collect the judgment against the ex if he has any assets. Sell the judgment to someone otherwise.
3) Negotiate. As someone mentioned above, call the creditor and negotiate the amount, then pay it. (This might not work because you would need approval from the ex.) Then follow 2) to recover the amount.
Also, if the creditor has to sue your wife or the ex to recover the amount owed, you will probably be on the hook for their attorneys' fees. That amount is probably another $1,000 - 2,000. Don't let it get to that stage.