Student Loan and the co-signor

A friend of mine co-signed 3 private student loans for their daughter. The daughter is out of work and so is the co-signor. They have been in touch with the lender on MANY occasions trying to work out something until they are both working again. They sent them several 100.00 payments when they could, her daughter sent weekly payments of 25-50.00. The lender told them they could not help lower the payments or defer them or anything. Now they sent the loan to the first process of collections. They were so nice to contact the daughter with options that a person with a job couldn't afford. they kept telling them that they had been making payments but they weren't good enough. To make a long story short, their options were unrealistic to say the least. They said they would be sending this to another collection agency (the next step to my friends destruction).

They do not know what to do. The co-signor is asking if her tax refund will be taken away? And what can the co-signor and borrower do to get help in paying these private loans back in a fashion that they can afford? Please help.