Dec. 22 (Bloomberg) -- Hillary Clinton formally wrote off the $13.2 million she lent her presidential campaign, closing a chapter on her failed race for the White House and helping ease the way for her Senate confirmation as U.S. secretary of state.
Forgiving the loan takes Clinton's personal debt off the books, a step toward shutting down her presidential-campaign committee as she prepares to become the top U.S. diplomat.
"If you're going to go into a position like that, you want to try to clear away whatever you can," said Larry Noble, a former general counsel to the Federal Election Commission.
Clinton started lending money to her campaign in January while competing in Iowa and New Hampshire as she tried to keep pace financially with Barack Obama, who was on his way to raising more money than any candidate in history. "It allowed her to stay alive in those final months when she really found her voice with the American public," said Julian Zelizer, a professor of history and public affairs at Princeton University in New Jersey. "That, combined with future accomplishments at state, could be pivotal in the long run to how the public and historians talk about her role in contemporary politics."
Senator Clinton, a New York Democrat, also wrote off $77,900 in interest on the loan, according to a filing with the FEC on Dec. 20.
Clinton, 61, had earlier said she didn't expect to be repaid. The money will now be considered a campaign contribution, which isn't tax-deductible, FEC spokesman Bob Biersack said. Nor can she deduct the money as a bad debt or as a job- hunting expense because political campaigns don't qualify under the tax code, said Paul Caron, associate dean of the University of Cincinnati law school and editor of TaxProf Blog.
Even after writing off the loan and interest, she reported owing $6.4 million to vendors as of Nov. 30, including $5.4 million to former chief strategist Mark Penn. That's down from $7.5 million at the end of October. She did pay off her $200,000 debt to spokesman Howard Wolfson and the $58,000 owed to media consultant Mandy Grunwald. Clinton spokesman Philippe Reines declined comment.
A 2002 campaign-finance law co-sponsored by Senator John McCain, Obama's Republican rival in November, bars presidential candidates from raising money after the nominating conventions to pay off personal loans greater than $250,000.
Clinton continues to seek donations to pay vendors, however.
Vice President-elect Joe Biden sent out an e-mail earlier this month seeking donations, as did Clinton's campaign committee. One solicitation over the name of her mother, Dorothy Rodham, offered an autographed copy of a book about Clinton for a $250 contribution.
The senator and her husband, former President Bill Clinton, released income tax returns during her presidential campaign that showed the couple earned $109 million in eight years. Their annual income rose to $20.4 million in 2007 from $420,000 in 1999. Almost half the Clintons' income during those years, $51.9 million, came from the former president's speeches.
The former president was also paid $29.6 million in royalties and an advance for his autobiography, and Senator Clinton received $10.1 million in book royalties and advances.
Bill Clinton, 62, last week released the names of his foundation's contributors, fulfilling one of the conditions he agreed to for his wife to receive the secretary of state nomination. He also agreed last month to have the State Department vet all future speeches and business endeavors.
"She has made a clean break with her political ambitions, at least for now, just as her husband has come clean with his finances," said Stephen Wayne, a professor of government at Georgetown University in Washington. "My guess, however, is that when she leaves her State Department position, she will stay in the spotlight and not starve." 
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