You could attempt to sweeten the pot a bit by requesting the debt collector to secure agreement from the crditor that, if you settle, the credtior will update their reporting to paid, with no additional reporting that it was settled for less. That will make the payment appear the same as if it was paid in full to anyone reviewing your credit report.
I personally would consider any settlement amount better than your current situation.
Since you are under a repayment agreement, then any default on your part will be withini SOL, and they can seek a judgment ordering full repayment.
