Sallie Mae offering to release co-signer obligation

I am a co-signer (I know...I know) on a private student loan for my son. He is unable to pay the loan. I was laid off from my job of 25 years in 2009. I have not been able to find a job in my field since (I'm 62...does that give you a clue?). I received a letter from Allied Interstate, a collection company, stating that Sallie Mae has offered to release me as the co-signer for a sum of $13,272. They state the balance of the loan at $33,181, on an original amount of $20K. My question is: it says they will report to the three major credit agencies that the co-signer/co-borrower's default will be updated as "co-signer/co-borrower obligation termed". I've never heard that term before. What does it mean and will it actually do something positive for my credit scores? Does this still leave the loan balance at the $33K figure as far as my son is concerned? Where did they get the $13K amount? I have not called them yet but will after I find out what this means.

Never heard of this wording but sounds like a fancy term for a settlement. Won't do a thing for your credit since the loan is in default. And there could be major tax implications. Call and ask. Do you have the $13k available to settle??

So, if paying the $13K to them won't do anything for my credit score, why would I choose to do it? Yes, I could take the $13K out of my IRA but I certainly don't want to. I would only do it if it helped my credit score. Can I deal directly with Sallie Mae at this point? What effect does the statute of limitations have on collecting this debt? It was originated in 2001.

When you borrowed the loan is irrelevant...student loans, because of in school deferments based their SOL on the date of default or when the last payment is made.

If you decide not to settle, sallie mae WILL sue both of you. That would result in property leins, bank account levies and wage garnishments.
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why cant the borrower pay???

Just to clarify, this was a loan for flight training provided by a private helicopter company. It was not a private or public college/university and he was not attending to receive a "degree". I'm not sure that makes any difference but thought I'd state it anyway.

He does not make enough from his job to pay what they want after his child support payments are deducted from his check. They quit calling him long ago and started in on me. I'm not denying that I am responsible as the co-signer nor that the loan should be repaid. Nor am I saying that he shouldn't be responsible for paying it either. Bottom line, I want to do what ever I can to ameliorate the effects on my credit.

My question is should I contact Sallie Mae directly or are they completely out of this at this point? From what I've read about Allied Interstate, I don't trust dealing with them. There is never any detail about what the $13K is...is it interest? Is it their collection charges? Is it an amount that Sallie Mae has approved and if so, what does AI get out of it? Will this have any positive effect on my credit if I pay it? It's been this long, why hasn't Sallie Mae sued us already?

Makes no difference. Training is still an education....hair stylists and massage therapists dont get degrees either.
Maybe he needs to work an extra job?
Nothing is going to improve your credit....the loan is already in default. Paying on a default is paying on a collection account....it does nothing for your credit score.

When did the loan default? When was the date of your last payment? What state do you live in? Your son?
No you cannot work with Sallie Mae. They hired Allied under contract...meaning they cannot interfere with allied's collection efforts without due cause.
As for collection cost, depending on your prom note, collection costs may have been added. Allied probably gets about 15-20% of what you pay.