Federal Direct Loans

Direct Subsidized Loans

Direct Subsidized Loans are offered to undergraduate students with financial need. They have a low fixed interest rate and do not accrue interest while the student is enrolled at least half-time in a degree program. Students do not make payments until six months after graduating or drop below half-time. Direct Subsidized Loans are available only to undergraduate borrowers.

Direct Unsubsidized Loans

Direct Unsubsidized Loans are available to undergraduate and graduate students with or without financial need. These loans accrue interest while the student is in school and during deferments and grace periods. Students may defer interest payments until after they graduate, but doing so will result in a higher loan payment over the life of the loan.

These loans have origination fees, so the amounts applied to your university student account are less than amounts listed on your Financial Aid Notice; fees are adjusted each fall due to federal sequestration legislation. Interest rates on these loans change each June with changes becoming effective on July 1.

Direct Subsidized Loan

Eligibility Criteria

• Need-based
• Must be enrolled in an undergraduate degree program at least half-time
• Borrower must be a U.S. citizen or eligible noncitizen

Loan Terms

Visit the Federal Student Aid website for the latest loan rate information.

Additional Information and Requirements

• Limited deferment provisions; for more information, search for deferment provisions on the U.S. Department of Education website
• First-time Direct Loan borrowers must complete an online Direct Loan Master Promissory Note before receiving their loan funds
• First-time borrowers at U-M must complete Direct Loan Entrance Counseling.
• Exit Counseling required when students graduate or drop below half-time
• More information from the U.S. Department of Education

Direct Unsubsidized Loan

Eligibility Criteria

• Non-need-based
• Student must be enrolled at least half-time in a degree program
• Borrower must be a U.S. citizen or eligible noncitizen

Loan Terms

Visit the Federal Student Aid website for the latest loan rate information.

Additional Information and Requirements

• Limited deferment provisions; for more information, search for deferment provisions on the U.S. Department of Education website
• First-time Direct Loan borrowers must complete an online Direct Loan Master Promissory Note before receiving their loan funds
• First-time borrowers at U-M must complete Direct Loan Entrance Counseling
• Exit Counseling is required when students graduate or drop below half-time
• More information is available from the U.S. Department of Education

There is a separate process for some undergraduates. Visit the Smart Borrowing page for information.

If you are a Direct Subsidized or Unsubsidized Loan borrower, you will be required to complete three Direct Loan Program requirements: sign a master promissory note, complete entrance counseling, and complete exit counseling.

Master Promissory Notes

Students borrowing for the first time through the Direct Loan Program must complete a Direct Loan Master Promissory Note (or MPN) to receive their loan funds. The MPN authorizes U-M to credit the Direct Loan funds to the U-M student's account. Once you complete the MPN, you will not have to complete another Direct Loan MPN for 10 years. Visit the Master Promissory Note page for details about completing your MPN.

If you prefer, you may complete a paper MPN, but there are more steps involved before approval and your loans could be delayed. To complete a paper MPN, sign in at studentaid.gov. Select "Complete MPN" to complete the MPN electronically, or "Print MPN" to print, complete, and mail a paper MPN to our office.

Entrance Counseling

If you are a first-time Direct Loan borrower at U-M, you must complete Direct Loan Entrance Counseling on the U.S. Department of Education's StudentAid.gov website under the "Complete Counseling" link. This interactive counseling session and quiz helps students develop budgets for managing educational expenses and also understand their loan responsibilities. You must complete the counseling before your loan funds can be disbursed to you.

Note: Entrance Counseling is not the same as the Financial Awareness Counseling Tool on the same site. Taking a demo counseling session will not fulfill your requirement.

Exit Counseling

This is required for Direct Loan student borrowers who are graduating or dropping below half-time enrollment. This counseling session helps borrowers understand their rights and responsibilities in repayment and helps them choose a repayment plan. You must use your Department of Education FSA ID to access this counseling session. To complete the Exit Counseling session, go to the StudentAid.gov website. Click the "Complete Counseling" link and follow the link to "Exit Counseling" to begin. 

Note: Exit Counseling is not the same as the Financial Awareness Counseling Tool on the same site. Taking a demo counseling session will not fulfill your requirement.

You must have signed all of your loan documents and be enrolled at least half-time to receive your loan funds. See Disbursement of Your Aid Funds for information about how your loan will be paid to you. Each time you borrow through the Direct Loan program, you will automatically receive your loan funds unless you decline them (see How to Accept, Decline, or Reduce Your Awards).