Loan Repayment (old)

Planning for the repayment of your student loans takes some thought and an evaluation of your situation and options. A solid understanding of your options, the hazards of default, and how to resolve federal student loan disputes is critical to your future financial health.

Beginning Repayment

Loans begin to go into repayment when a borrower does the following:

  • Graduates from school
  • Takes a Leave of Absence
  • Withdraws from school
  • Transfers to another school
  • Drops below half-time enrollment 

In addition to these times when a borrower must begin to repay, most loans provide the option to make payments before your repayment period begins without penalty. 


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Making Payments

Repayment Options

How much can I expect to pay?

Direct Loan repayment varies by student.  Your monthly payment amount is determined by how much you borrowed, when the funds were disbursed, when your loan enters repayment and the type of repayment plan you choose.

To give you an idea of repayment let’s assume we have an undergraduate borrower with the following loans:

1st year Subsidized Loan of $3,500 with an interest rate of 4.66%
2nd Year Subsidized Loan of $4500 with an interest rate of 4.29%
3rd Year Unsubsidized Loan of $4,500 with an interest rate of 3.76%
4th year Unsubsidized Loan of $5,000 with an interest rate of 4.45%

For a total of $17,500 with a weighted average interest rate of 4.3%

Assume the student enters repayment immediately following the end their six month grace period, and they have an annual salary of $32,000.  The grid below shows the different repayment options available to the borrower and lists the monthly payment, the length of time it takes to pay off the loan, and the total amount paid for the loan. 


Plan Name

Monthly Payment Total Amount Paid # of Months in Repayment
Standard $180 $21,542 120
Graduated $101-$302 $22,556 120
Revised Pay as You Earn (REPAYE) $116-$244 $22,592 131
Pay as You Earn $116-$180 $22,763 142
Income-Based Repayment (IBR) $174-$180 $21,576 121
IBR for New Borrowers $116-$180 $22,763 142
Income-Contingent Repayment $117-$141 $24,311 189











The example above does not take into consideration the interest that accrues on the Unsubsidized loan while the student is in school. 

We recommend that you log into the Repayment Estimator at with your FSA credentials to get an estimate using your actual loan data.



Loan Forgiveness and Reductions


Student loan default occurs when a borrower fails to make timely payments to the lender.

Defaulting on student loans has serious consequences. The loan may be turned over to a collection agency.

  • The borrower will be liable for the costs associated with collecting the loan, including court costs and attorney fees.
  • The borrower can be sued for the entire amount of the loan.
  • Defaulted loans will appear on the borrower's credit report, making it difficult to obtain other types of consumer loans.
  • The borrower will be ineligible for any kind of deferments.

In addition, for Federal Student Loans:

  • Wages may be garnished.
  • Federal and state income tax refunds may be seized.
  • The federal government may withhold part of the borrower's Social Security benefit payments.
  • The borrower will not receive any more federal financial aid until the loan is paid in full or arrangements are made to repay what is already owed by making at least six consecutive, on-time, monthly payments. 
  • A professional license held by the borrower may not be renewed.

Please Note: Student loans are not generally dischargeable through bankruptcy.

To rehabilitate a defaulted student loan, please contact your lender.

Note: Duke's three-year cohort default rate for 2014 is 1.1%.


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Resolving Disputes

The Federal Student Aid Ombudsman is a government official designated to help students resolve disputes and other problems with federal student loans. 

  • The FSA Ombudsman will research your problem in an impartial and objective manner and will try to develop a fair solution
  • The FSA Ombudsman does not have the authority to impose a solution

Many students have found the FSA Ombudsman to be helpful in resolving disputes with lenders. You can contact the FSA Ombudsman
by phone at 1-877-557-2575,
by fax at 1-202-275-0549,
by mail at U.S. Department of Education, FSA Ombudsman, 830 First Street, NE, Fourth Floor, Washington, DC 20202-5144,
or by completing the secure and confidential Ombudsman Assistance Request Form.

The Student Loan Borrower Assistance Project is run by the National Consumer Law Center.
This website:

  • Provides information on loan problems and how to resolve them
  • Includes a list of lender and guarantor ombudsman
  • Does not provide legal advice about individual cases


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