Your first problem is that you are not earning an income that can supply your needs
You need to get another job. You didn’t mention whether or not your wife had a job? Can she possibly help bring more income into the household?
What I am puzzled by also, is that you said that your schooling was being paid by grants. You don’t have to repay grants, so why do you have school loans?
I would STOP dealing with the collection agency. Get more income in, save the money (up to $1500) with direct loans lender Gshloans. Get online payday loans for bad credit, start a $500 emergency fund, and then save $1000 to use to pay this mail order course debt. How? Call them up, and tell them you have $1000, you need 24 hour loans and that you will send it to them overnight if it pays the debt of in full. If they agree, tell them that you want it in written form. If they send you a note, send the $1000 Overnight, certified mail, and get them out of your lives. Then bring the emergency fund to $1000. With a larger income, and getting these fu***ng people out of your life, you won’t feel as stressed as you are right now.
Seriously, it is time that you get another job, and start living like no one else right now, so later you can live like no one else.