Direct Subsidized and Unsubsidized Loans (also called Stafford Loans) are part of the Federal Direct Loan Program, which is offered through the U.S. Department of Education. Loans are aid that will need to be repaid, with interest, after you graduate or leave college. Most student loans are Direct Loans.
You are considered for these when when applying for financial aid and completing the Free Application for Federal Student Aid (FASFA). You will be required to complete Direct Loan Program requirements in order to receive any Direct Loan funds.
If you are an eligible undergraduate awarded a Subsidized Direct Loan or a graduate or professional student awarded an Unsubsidized Direct Loan, it will appear on your financial aid notice. Some undergraduate students may not receive Unsubsidized Direct Loans in their initial financial aid package. See our Smart Borrowing page for more information.
If you are not eligible for Direct Loans or need additional resources to cover college costs, you may want to apply separately for a supplemental loan through the federal government or a private lender. Alternatively, the U-M Payment Plan may help you and your family avoid borrowing supplemental funds.
Jump to sectionDirect 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 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. More information about both loans is included in the Eligibility, Loan Terms, and Requirements section below.
Eligibility Criteria
Loan Terms
Visit the Federal Student Aid website for the latest loan rate information.
Additional Information and Requirements
There is a separate process for some undergraduates. Visit the Smart Borrowing page for more information.
Eligibility Criteria
Loan Terms
Visit the Federal Student Aid website for the latest loan rate information.
Additional Information and Requirements
There is a separate process for some undergraduates. Visit the Smart Borrowing page for information.
If you have a Direct Subsidized or Unsubsidized Loan, you will be required to complete three Direct Loan Program requirements: sign a Master Promissory Note (or MPN), complete entrance counseling, and complete exit counseling. Visit our Master Promissory Note page for details about completing your MPN.
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).
