want to know if a collection agency can charge interest on a debt

Under Section 808 Unfair Practices of the Fair Debt Collection Practices Act under the Consumer Credit Protection Act, federal law prohibits a debt collector from collecting any amount (including any interest, fees, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.

If a debt collection agency owns your account, and you did not expressly enter an agreement to pay interest and fees to that collection agency, than they cannot charge you anymore than what the already existing balance is.

Shaz is absolutely right. You may check your credit agreement if it is mentioned in it that the collection agency can charge interest on the collectible amount. Moreover, you may also look up the statute of limitation of your state regarding this debt. It seems pretty old.