Private loans are not what I know well so hopefully someone can provide a better answer.
First, I would double check that it really is a private loan and/or that he doesn't have any federal loans hanging out there. He can check this on the NSLDS, National Student Loan Database gov website. It's nothing's there, he's in the clear.
My understanding is that if the loan is beyond the SOL and they haven't sued, they won't be able to do so. No lawsuit and judgement... No way to connect. Yes, he will always owe the debt, they just have no way of making him pay. It's best to run this by a lawyer though, such a on AVVO since it's free.
He can attempt pay for delete anything he might want to get it in writing. I'm not sure if anyone had success with that though. If you're sure about the SOL I'd personally ignore it if it couldn't be enforced.
What Sabii said ^
If it is well and truly a private loan (and please be sure, first), then you can treat it like any other debt.
If you can find out what the DOFD is, that would be REALLY helpful.
If it's been 7 years (or close to it, and it sounds like it might be) then it can't/won't be put back on his credit report (and if it is, it will fall off at ~7y or 7y+180d).
Settling for $1700 sounds like a great deal to me, if it's something you have to worry about or if you feel you should pay it (I won't go into morality of whether or not you should here, that's up to you).
So many "if"s in this story, good luck!