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collections on school tuition?

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I live in NJ and the CA is from PA.
My son has received a letter from CA on May 3 that he has total of $1700 pay within 30 days.
It is his school tuition, not a tuition loan, that we couldn't make pay due to the financial issue.
We made 3 phone calls to negotiate and the agent who handles my son's account tells us the same thing every time we call and no negotiation at all.
She said that if we don't make full payment within 30 days, which is June 3, it affects my son's credit score.

Even if we pay full amount when she lowers the total amount, NO.
And if we make monthly payment, it will still affect my son's credit score.
I said that I have 9th grade daughter and I have medical condition with no job and my son just started a job but he needs to pay the rent, the utilities, and etc.
 
What should I do?
We have only a week or so until June 3.
All we could scrap up was about $800.

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More information is needed.  Is this a loan that was one of the short-term loans many colleges and universities offer to their students or is this remnants of an actual student loan? 

 

Any reason why he cannot go to his small, local bank and obtain a loan?  For $1700, it shouldn't need to be more than six months to a year in duration. 

 

Beyond credit score, the other obvious question is whether he is still attending the school.  If so, then non-payment could impact his enrollment...

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