I am in the process of rehibilitaing my student loan. However before I go into any kind of agreements i have a few questions my loan is from california, I have wage garnishment pending however I am collecting unemployement.
I have contacted the Office of Ombudsman & they have advised the collection agency that I am under financial hardship and want to work out a payment with them & I have not consollidated my loans

My question are
1. Once i start making payments, does the wage garnishment judgement cease?
Since you are unemployed, you would not have a wage garnishment pending...there are no wages to garnish. However if you where employed, and if you mailed in the appeal letter and entered into satifisfactory repayment, the garnishment would cease.
2. After rehibilitation, do I have to pay the collection costs? Yes. Do I have the option to negotiate this? No. Not with FFELP lenders.

3. Will I have the ability to negotiate my monthly payment, so that they will be similar to what I am paying during rehibilitaion?
No. The way rehab works is that it is amortized into a ten year, 120 month loan. Your 9 rehab payments are the first 9 payments. The remaining balance is amortized out over the remaining 113 or so payments.
So for some, the payments go up, some significantly. What a lot of people do is immediately consolidate upon completion of the rehab.
4. Does the Loan go back to the originating party once rehibilitation is complete in my case (ED-FUND)or does it remain with the collections agency?

Your loan is sold to a lender. It may or may not be the originating lender.

Your advise is greatly appreciated