Student Loan And NCO

Okay so I was trying to get my small student loan in line (around $1400 and rising every day) so I can return to school as it is in default. So I contacted DCS the last collection agency that had it. They said to call the Iowa Student Aid Commission... the Iowa Student Aid Commission told me to call Iowa Student Loan Liquidy Corp. , so after calling the Iowa Student Loan Liquidy Corp. they told me to call NCO financial as the currently had the loan... I know this is alot of hand switching in under 2 years. So I contact NCO and they said after telling them I needed this loan out of default so I could get back into school and finish what I started that my student loan was too little and did not qualify for any programs such as consolidation, etc... I am currently receiving unemployment benefits at $880 a month and have my first child on the way and bring in the only income and take care of myself, my fiance, and soon a child. I explained this to them that there was no way I could pay in full with there "great" offer of $1000.00 (Note my original loan was $1350.00 and I have paid $500 into it) so after telling them that they said "Hold on let me talk to my manager and see if she can help us get something worked out for you." So the guy gets back on the phone and says that actually I can have my loan consolidated and his manger said that they wouldn't usually do it for a loan this small but she can get it done for me... So we go through the usual of seeing how much I make...spend on food..rent, etc... and tells me to hold... when he comes back he says that they are going to send me a package in the mail to fill out and I have to pay them $100.00 and it will be pulled out of default as soon as I pay that and they receive my paperwork...but thinking about it now they asked for 2 references and the guy kept saying this isn't us that needs it, it is the federal government so we can get these squared away...so should I be paying them the $100 or the federal government.. Now I am new to this as I do not owe credit cards, cell phone bills, etc so I apologize about the confusion... I've read about NCO on this website and now am quite concerned that I am going to give them $100 and they are not going to do as stated and make me have to give them payments over time before they pull it out of default, I was specifically told as soon as I pay the $100 and return the paperwork my student loans will be immediately pulled out of default... How should I proceed with this as the most important thing in my life right now is to get this out of default and get my eligibility back for student loans (once out of default I am eligible again) so I can actually get into a career and at least make a few bux... They seemed very nice (NCO) and I just wanna make sure I take every step to guard myself from being taken advantage of. I don't think this is the case but you never know as my research states with this company's track record. So any advice on what I should do on handling this properly would be welcome. Should I get this agreement in writing before I pay, I feel that I should probably really do that:)