is this account reporting on your credit report?
in this case do you best to negotiate with the original creditor, citi. if you run into roadblocks, hang up and keep calling back until you find someone at citi who will accept payment from you. also, try not to deal with the recovery dept, they are essentially collectors and will tell you anything to get money. find a VP or someone with authority in their student loan dept. you will probably find them more friendly and fair. citi is a huge organization, and it may take a few phone calls to find the right person.
and if you do send money, be sure to put a restrictive endorsement like ' for deposit ONLY to Citibank, not transferable' on the endorsement line. this ensures that they do not send the payment to the CA, which will likely report as a paid collection on your report. depending on your state there may be more specific guidelines for restrictive endorsement, so look it up before you send anything. do this quickly because if you are able to pay citi, the account may be recalled from the CA before it hits your reports.
avoid the collection agency like the plague, but when/if they do contact you, immediately send a DV letter CMRR. do not talk to them on the phone. do not agree to anything til you get advice on this forum. communicate only via mail.
one more thing.. if you pay anyone, use a money order or cashier's check. using a credit/debit card or personal check opens your account info up to whoever takes the payment. that could cause problems later on.
why did you delete your original post? It's always good to leave it in case others have the same problem and can learn from your situation. I would also suggest for people to check out some of the articles on http://www.studentloans.net - they have great info that can help you figure out a good solution for your situation. Hope that helps