Before you borrow
Student loans can be a helpful resource when paying for college. Knowing how much you need to borrow, what types of student loans are available, what to look for when choosing a loan, and understanding the terms of repayment can help you find the best loan for your unique financial situation.
Before you apply for a loan, consider the following:
Visit our borrower FAQs for more information on the timeline for loan processing, steps to apply, and other helpful information.
Loan FAQs
The rate for the federal student loans for the 23-24 academic year is 5.50%.
If additional loans are needed to pay your bill or for school-related expenses, please contact our office or your counselor through DukeHub.
Please read through the information on our website here. Parents can apply for the Federal Parent Plus loan by visiting www.studentaid.gov. Parents and students can review our recommended lender list to apply for private loans.
After you apply for a parent or private loan you will be notified if you are approved. The information from the lender is sent to the school, and Duke will complete a certification process and add it to your aid offer and DukeHub. The process can take up to 10 business days to complete. The loan will come to Duke and reduce any charges on your student account. Note: If the semester has not yet started, funds won't be visible on your account until 10 days prior to the start of the term.
If a loan is denied, you will have the option of obtaining an endorser (an additional person who will co-sign with you) with qualifying credit.
- If you are approved with an endorser, the information from the lender is sent to the school, and Duke will complete a certification process and add it to your aid offer and DukeHub. The process can take up to 10 business days to complete. The loan will come to Duke and reduce any charges on your student account. Note: If the semester has not yet started, funds won't be visible on your account until 10 days prior to the start of the term.
- If you are not able to seek an endorser, please let our office know.
Types of Loans
There are three sources for educational loans:
- The Federal Government
- State Governments/State Agencies
- Private Lenders
Each of these lenders offer loans for students and parents. A student loan is a debt in the student’s name, for which the student is responsible for repaying. Parent loans are not in the student’s name, they are in the parent’s name only. The student does not have any legal obligation for repaying their parent’s loan.
Most educational loans require credit history and/or a creditworthy co-signer. Because undergraduate students don’t have as much credit history as their parents, the interest rate for educational loans is usually higher for students than for parents. A student loan with a co-signer who has good credit will lower the interest rate.
The Federal Direct Subsidized and Unsubsidized loans do not require a credit check, and they also tend to offer the lowest interest rates and most flexible repayment options. If you qualify for either of them, they will be included in your financial aid offer.
Federal Parent loans require a credit check, but do not take the borrower’s credit score into consideration. To be considered credit worthy, the borrower cannot have an adverse credit history. Interest rates for parent loans are generally higher – individuals with good credit history may find better rates among other educational loans.
Loan Limits
Most educational loans have a limit to how much you can borrow. As a borrower, you cannot take out an educational loan that exceeds the Cost of Attendance. In addition to this limit, many of the educational loans also have annual and aggregate limits for the amount you can borrow. An annual limit is the most you can borrow in any given year while an aggregate limit is the most you can borrow over a lifetime.
Cost of Borrowing
There are several factors that contribute to the overall cost of borrowing educational loans:
- Origination Fee
- Interest Rate
- Interest Accrual
An Origination Fee is a cost that can be charged by the lender as a way to recoup some of the lender’s processing costs. The fee is charged upfront and deducted from the amount before the loan is even disbursed. Federal Government Loans charge an origination fee for both students and parents. It is less common for State Government/State Agency Loans and Private Loans to charge an origination fee.
The Interest Rate is the rate you are charged for borrowing and is usually represented as an Annual Percentage Rate such as 5% APR. Interest rates can be fixed or variable, meaning that the rate will always stay the same (fixed) or it can change over time depending on the financial index used (variable).
Interest accrual refers to when the lender begins charging interest. Depending on the type of loan, interest accrual will either begin on the day of disbursement (unsubsidized loan) or when the loan enters repayment (subsidized loan), usually 6 months after you leave school.
Repayment
The start date for paying back your educational loan depends on the type of loan you borrowed.
- Student loans generally go into repayment six months after the student drops below half-time enrollment. There is a six month grace period between enrollment and repayment during which time payments are not required.
- Parent loans generally begin repayment once the loan is disbursed. However, some loan programs offer parents the option to request to defer payments until their student drops below half-time enrollment.
Most loans have a 10-year repayment period. Only Federal Loans offer lower monthly payments based on your income.
All federal borrowers will have the opportunity to attend student loan exit counseling sessions. A list of available sessions as well as additional information about managing debt after graduation can be found at Personal Finance @ Duke.
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 $4,500 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) | $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 Loan Simulator at studentaid.gov with your FSA credentials to get an estimate using your actual loan data.
Loans
Paying for college, understanding the borrowing process, and managing your money while in school can be difficult topics to navigate with confidence. The Office of Student Loans and Personal Finance is here to provide resources and support to help you make more informed decisions when it comes to financing an educational experience here at Duke. Browse our page or reach out to us with your questions.
We are here for you!
Office of Student Loans and Personal Finance
email: personalfinance@duke.edu
phone: 919-660-3630
Loan Forgiveness
Forgiveness programs for educational loans are very limited and require specific eligibility criteria.
For example, Federal Loan borrowers may receive loan forgiveness after working for a qualifying employer. Some State/State Agency Loans offer similar programs to encourage employment in certain professions. The NC Forgivable Loan is another example of a loan forgiveness program.