Product: Debt collection

My personal student loan from XXXX College was managed by XXXX XXXX XXXX After I graduated XXXX College shut down and XXXX was purchased by DeVille Asset Management . I was making regular payments to XXXX not knowing the payments were going to DeVille Asset Management. When checking my credit report to rent a house, I saw that the account I have been regularly paying to is being reported to XXXX as a collection. I have the listing from my account of all payments made and their dates, and I am current on the account, but it still shows on my XXXX  Credit report as a collection. 

I had switched to bank-routed payments through my bank 's bill pay service since there was a vague accounting system going on and my payments were shown as posted, but my loan amount wasn't going down. I was contacted by them since one of my  payments didn't arrive properly and I opted out of Automatic Payments through my debit card. Since I was able to correspond with a customer service rep, I asked for the correct address to send payments to, since I thought maybe the payment went to the wrong address. I corrected the address, but since I was able to correspond with customer service, I asked about correcting the collection on my account. I have included correspondence below : ME : Thanks ( Customer Service Rep ), I have updated the address in my bill pay system ( I did have the previous one on  there ). 
Since I am able to contact you, is there any way of finding out if the collection on my credit report with XXXX  can be removed? 
I finished school in XXXX, and have been paying regularly since XXXX, and since XXXX was acquired by Deville Asset Management ( or was always owned, I'm not sure ) Deville Asset Management is showing as a collection on my XXXX report. I contested it, and was recommended to speak with the loan processor. So when I tried to speak to someone at Deville Asset Management, they basically said it's gon na stay that way and there is nothing to do about it. Is there any way to remove the collection from my XXXX   report since I am paying on time? 

CSR : Unfortunately Deville Asset Management is correct. 
They are a collection agency but they own your loan and report to the credit bureaus. 
That is why your credit bureau reporting is being reported in collections. 
Their policy is they will not remove the credit bureau reporting until the loan is paid in full. 
That or you must pay a settlement amount, which is a one time  payment, to settle the account. 

ME : Can you please advise me on the payoff amount so that I can negotiate a loan to payoff this loan? 
Sending me to collections or reporting it as a collection on my credit report when I am current on payments is totally unethical and not what I signed up for. 
I understand it's nothing you can control, but this company is not really helping anyone. 

CSR : Hello ( ME ) The payoff amount on your loan is {$9600.00}. 
The loan can be settled for 50 %. That amount would be {$4800.00}. 

By this admission, they have essentially hijacked a student loan from my completed school program, changed my credit report to show a collection, and are now holding it hostage for the 50 % of the original amount to pay it off, and there is no guarantee that my credit score will be fixed or updated.