Oh Boy! Yeah, after reading your post I visited the student aid website and sure enough it said it will not remove the default from the credit file. So I just shot my loan officer an email asking him if a consolidation to get it out of default will be enough to get us a mortgage or if we need to pay the 9 monthly payments to rehabilitate it. Nothing is ever easy when you do not pay your student loan!
If my experience means anything... 
I paid my 9th rehab on July 15. Aug 1 it landed with the new servicer. 1st payment due Aug 7. (they notified me via email, I have yet to recieve a letter, very glad I check my emails regularly.) After first payment posted I applied for consolidation. Aug 16 the DOE deleted collections from EX, EQ, still waiting on TU.
I chose to go the rehab route to get the negs pulled upon completion. I am also going the consolodation route because I have 7 loans and the minimum payment is $50 per loan and I'd rather have the lower payment to not kill my DTI.
Loans are with FedLoanServicing - they claim they update at EOM and at that point all negs will flip to "current, pays as agreed" dated back to 2013 when the defaults went into place.
Hoping this all goes smoothly as we are really ready to pull the trigger on a mortgage application.
When we asked the LO about applying during rehab she said wait until it's cleared before applying.
Not quite on topic but my main point was consolidation will be a better option for us AFTER rehab due to the number of loans.
Hi UsoDak,
A little update on this...
So FedLoan took nearly 2 months to consolidate my loans, as compared to my husband's at Navient who took less than a week.
FedLoan left my 7 neg accounts, added 7 new accounts as "good, paid in full" and the new single consolidated loan. All US Dept of Ed negs were completely deleted.
It helped my average age of accounts but didn't help with the number of negs reporting. The new consolidated loan didn't hurt other than now one of my reasons for the score is "remaining balance on mortgage or non-mortgage loans is too high."
The FedLoan website is fairly straightforward and I have my loan on auto pay. I've had to call a couple of times and they've been pleasant to speak with.
The positive on the negs is that all the balances now report zero, even though they are still stamped with 120+ days late. My fault, I'll just have to eat it until they fall off end of 2019.
They didn't stop me from getting my mortgage - my DTI was super low.
I think if I'd waited to consolidate there's a possibility the existing negs may have just been brought current but I was in a hurry to consolidate so I could start the ball rolling on the mortgage process. I'll never know
It does seem like FedLoan takes FOREVER to update reporting though. They say monthly but it seems more like quarterly.
