Why was this debt taken out of collections?

About 6 months ago, my Fiance and I were trying to buy a car. We were approved for a loan... WITH A 17.9% INTEREST RATE!!! It turns out I had a college loan that had gone into collections. After recieving numerous calls from the collection agency, i was applying to have the loan consolidated with another loan I had for school. When i called the agency about a month ago, they said that the debt was no longer in collections and had no further information. What happens when a debt is taken OUT of collections?