What should my daughter and I now that we have been served with a Civil Summons from the State AGs office regarding student loan repayments?

Unfortunately, you need to make payment arrangements with the NC Attorney general and you are probably looking at having a judgment etnered against your daughter and yourself. Student loans are not dischargeable in bankruptcy without very extenuating cirumstances. The AG can offset tax returns and garnish wages. The loan should never have been allowed to go into default. They don't do this unless the loan is very past due. They are also very inflexible about settlement. No doubt this is already negatively affecting your daughter's credit as well as your own. State of NC loans are not given the flexible repayment plans that the Federal loans are so you are stuck with what ever the State will give you. Note that a judgment against either one of you could end up being a lien upon real estate depending on the circumstances. Options are very limited especially if no effort at all was made to repay the loan so far.