Sounds easy to do in theory...
Up until recently we were upside down in the house. Lately the market has crept up and it looks like it may be a good time to sell... I figured the only answer was total shock and awe attack on something this crazy. It's a tough pill to swallow and I'm way more on board with mustachian values than DW... She see's $100k going right through her fingers with nothing to show but a smaller number on the spreadsheet... I'm still trying to beat it into her head that we need to get hot on this asap. She wants to hold out for the loan forgiveness option... (While I like the idea, it seems to have more ways to not work than to actually work)
Picking it up a little back in the thread, as there is an important remark here. I agree with all the other remarks regarding sell the house, refinance the student loans, and so forth, but if she would see 100k (which you'd have liquid) as what you could spend/do fun things with, while the 270k on the loan side doesn't feel like something you'd have to repay, then definitely you need to work on her mindset.
If I understand your first post correctly, you have close to $620k in debt? ($50k your SL, $220k her SL, $250k 2nd rental, $100k your house) And you list $330k as the value of the 2nd house, so I would be curious how much equity you have left on the house you live in. By selling the 2nd house, and paying off her debt with it, you'd be reducing your total debt from $620k to $290k as the mortgage from the house also can be scrapped off the list.
Is it a possibility to refinance some part of the student loans by increasing the mortgage on your house, so you reduce the overall interest? Basically, if you could get that $290k to $50k yours, $150k your mortgage, and $90k her SL, then you are maybe already in a decent place from overall interest % point of view? Then, devise a plan to pay off that remaining debt to the point where you only have 3% loans remaining, and work on a growth path?
Then compare that to the current as-is situation, and how long you will be repaying that debt, and what it means to your family from a cash flow / equity point of view. Maybe once there are improvements on the cash flow front, reserve a little for fun money so she can feel a tangible improvement already.