Options if defaulted on a federal student loan?

My boyfriend defaulted on a federal student loan in 1995, and his wages have been garnished ever since. None of the money has ever been applied to the principal. The loan holder will drop $8,000 in collection charges if the loan is paid off in a lump sum.Yet, he can't get this kind of financing ($35,000) at a regular bank because of his poor credit, and because he has already consolidated once. If he enters the loan holder's "rehabilitation" program and pays additional money for 9 months (on top of the garnishment) they will drop the default status, enabling him to get the financing, but they will not drop the collection charge. He can't get a home equity line of credit, and the typical student loan financers won't help him because of the "default status" on this loan - a catch 22. Who can go to that will loan him the money to refinance this nightmare? It seems like they make it difficult for him to get out of this because it is a cash cow for them, and a perfectly legal scam.