Once it went to collections, the original lender had "written it off" as a loss. the 'debt' now belongs to the collections agency.
You can negotiate with the collections to pay LESS than the full amount. However, keep in mind that the collections's job is to squeeze as much money out of you as possible. They basically bought your "debt" from the lender for a tiny amount. The more they get out of you, the more $$$ they make. On the other hand, they do evaluate your circumstances and how much effort they are putting on your case.