How deep a hole is this?

One of my boyfriend's student loans just got turned over to a collection agency. How bad is this? He's a graduate student and has several student loans. He's always been prompt with payments, including slowly paying off the principal. He assumed that this loan would be automatically deferred since he's still a graduate student, just like his other student loans. He even called them a few months ago and then they told him that the deferment was taken care of. Now, without any warning, they've turned it over to a collection agency. He never received an email, a letter or a phone call before this happened. It seems really unfair to me that my boyfriend should be punished because the company misled him. He now has to fill out a form saying that he's still in school and send it to them. My question is: how bad is this going to look on his credit report? Is there any way for him to get this completely removed from it? Basically, what recourse does he have to fight this?