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I just finished consolidating with them and it went smoothly and well. I took the income contingent plan because I have a lot of loans and am just this year getting on my feet after a big bout with major illness. I was terrified to call them, but they were great. I made minimum payments for the first three months while they processed my paperwork, then I paid interest only for a few months while they determined my income level. Last week I received the notice regarding what my payment amount would be. I'm sending them $150 over the payment amount each month, and seeing that balance go down feels really good. I was told that even if you are defaulted, once you establish good faith by paying the first few payments, they take you out of default, and once your loans are consolidated and you have made a few payments there, they notify credit agencies that your account is current.

My advice to anyone who needs consolidation or is in default/collection is to get in touch with Direct. They are not mean, and in fact are very nice and helpful. No one will yell at you or say you are a bad person. They are just the opposite...very supportive of you if you contact them because you want to repay the loans. There are so many student loan deadbeats out there, they are ecstatic to hear from people who approach them because they want to pay. Their interest rates are low and they do not charge you goofy penalties and collection fees.
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