Is rehabilitation my only option?

[qwerty-7]

I have been making monthly payments on a student loan for almost the last two years. After recently reviewing my credit files I saw that I had other student loans in default. This was a surprise because I thought that they were paid off with my tax returns from the last couple of years. They were not. Almost on cue I received notice of the default status in the mail. First notice in over a year. Anyway, I immediately made settling these loans a priority. Here's the question:

 

My current loan that I have been making payments to is with William D. Ford but my others are with Dept. of Ed. Since I have been making timely payments for almost two years, I should eligible for consolidation. Right? William D. Ford people say yes. Dept. of Ed. people at their collection agency say that rehabilitation with a $1000 down and monthly payments with them for a year is the only option. With the later option I will have to wait a year to see any change. Who's pulling my chain?

[onmyway06]

my fiancee has kind of a similar situation...he thought that payments were being applied to his loans

because his tax refunds are being collected...at least that's what he was told. but then recently got a letter

from a CA (NCO) that the DoE has transferred the loans to them for collection...