It sounds like this is a PLUS loan - a federal loan taken out by a parent on behalf of an undergraduate student. These loans are eligible for rehabilitation, so I would reccomend contacting the collection agency and telling them you want to rehab. After 9 months of on-time payments, the loan will be transferred back to a regular servicer, the collection account will be removed from your report, and any remarks of the default will be removed from your report. It definitely offers the best credit rebuilding benefits.
