SEARCH
 Direct Subsidized & Unsubsidized Loans

Direct Subsidized and Unsubsidized Loans (also known as Stafford Loans) are part of the federal Direct Loan Program, which offers low-interest loans to students to help them pay for college. They are called Direct Loans because they are made directly from the U.S. Department of Education, without going through a bank or other lender.

Students who apply for financial aid are considered for federal Loans. 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 award notice.

Direct Subsidized loans are available only to undergraduate students. Some undergraduate students may not receive Unsubsidized Direct Loans as part of their financial aid package. If you do not receive an Unsubsidized Loan or if you wish to borrow a federal loan for Spring-Summer terms, visit www.finaid.umich.edu/SmartBorrowing for instructions and information.

You will be required to complete the Direct Loan Program requirements described on this page in order to receive your loan funds.

On this page

 

ABOUT SUBSIDIZED AND UNSUBSIDIZED 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. In addition, students do not have to make payments until six months after they graduate or drop below half-time. Direct Subsidized Loans are availableonly 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.

More information about both loans is included in the Eligibility, Loan Terms, and Requirements table below.

Change in procedure for obtaining Unsubsidized Federal Direct Loans

Effective Spring 2013, U-M will have a different process for Unsubsidized Federal Direct Loans for some undergraduate students. If you do not receive these loans in your financial aid package and want them, complete an online tutorial detailing your cumulative student loan debt and what it will cost to incur additional debt. Those registering for Spring-Summer terms and wishing to borrow under the federal Direct Loan program will do online counseling and meet with an aid officer. This change does not affect graduate or professional students.

Visit www.finaid.umich.edu/SmartBorrowing for more information.

 

 (return to top of page)

ELIGIBILITY, LOAN TERMS, AND REQUIREMENTS

The terms of the Direct Subsidized and Unsubsidized Stafford Loans are included in the table below:

Eligibility Criteria Loan Terms Additional Information/Requirements
 DIRECT SUBSIDIZED LOAN

• Need-based

• Student must be enrolled in an undergraduate degree program at least half-time

• Borrower must be a U.S. citizen or eligible noncitizen

• If you receive your first loan after June 30, 2013, there are time limits on how long you can receive these loans. Learn more here.

• 4.66% fixed interest rate (effective for loans originated July 1, 2014. Rates change each July 1.) 

• 1.072% origination fee  (effective for loans originated Dec. 1, 2013; 1.073 for originations on or after Oct. 1, 2014. Fees are scheduled to change each fall due to federal budget sequestration.)

• Repayment is deferred and there is no interest while the student is enrolled at least half-time

• See Borrowing Limits for Direct Stafford Loans below

• Direct Loans can be consolidated with other federal loans

• Limited deferment provisions; see Your Federal Student Loans: Learn the Basics and Manage Your Debt and Cancellation/Deferment Options for Teachers on the Dept. of Education website

• Students accepting Direct Loan funds for the first time must complete an online Direct Loan Master Promissory Note before receiving their loan funds.

• First-year students who are first-time borrowers 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

Some U-M undergraduates go through a separate process for federal Direct Loans for Spring-Summer terms. Visit www.finaid.umich.edu/SmartBorrowing for information.

 DIRECT UNSUBSIDIZED LOAN

• 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

• 4.66% variable-fixed interest rate for undergraduate students (effective for loans originated July 1, 2014. Rates change each July 1.) 

• 6.21% variable-fixed interest rate for graduate students (effective for loans originated July 1, 2014. Rates change each July 1.)

• 1.072% origination fee  (effective for loans originated Dec. 1, 2013; 1.073 for originations on or after Oct. 1, 2014. Fees are scheduled to change each fall due to federal budget sequestration.)

• Interest begins accruing immediately; may be paid periodically or capitalized (see promissory note)

• Repayment of principal is deferred while the student is enrolled at least half-time.

• See Borrowing Limits for Direct Stafford Loans below

• Direct Loans can be consolidated with other federal loans

• Limited deferment provisions; see Your Federal Student Loans: Learn the Basics and Manage Your Debt and Cancellation/Deferment Options for Teachers on the Dept. of Education website

• Students accepting Direct Loan funds for the first time must complete an online Direct Loan Master Promissory Note (see below) before receiving their loan funds.

• First-year students who are first-time borrowers 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

Some U-M undergraduates go through a separate process to obtain a federal Direct Unsubsidized Loan. Visit www.finaid.umich.edu/SmartBorrowing for information.

 (return to top of page)

BORROWING LIMITS

Your financial aid award notice shows the amount of Direct Subsidized or Unsubsidized Loan funds you may borrow for the current award period. If you have already received a University of Michigan uniqname and password, you can view your financial aid awards on Wolverine Access (select Financial Aid > Awards). Wolverine Access also allows you to see the cumulative amount you have borrowed to date through all loan programs (select Loans > View Student Loan Summary).

You can also use Wolverine Access to determine what your loan payments will be for all loan programs (Direct Stafford, Perkins, Health Professions, Nursing, and private loans) once you graduate or drop below half-time enrollment. See Repaying Your Student Loans for more information.

The amount of Direct Subsidized or Unsubsidized Loan you may borrow by year in school and the total amount you may borrow are shown in the table below. These amounts are determined by the federal government.

Direct Subsidized Loan Time Limitation

Effective July 1, 2013, first-time and new Federal Direct Subsidized Loan borrowers are limited in the amount of time they qualify for an interest subsidy.  Students who have exceeded 150 percent of the published length of their current educational program will be:

  • ineligible for additional Federal Direct Subsidized Loans (though you may borrow a Federal Direct Unsubsidized Loan) and
  • responsible for interest on all loans accruing after exceeding the 150 percent limit.

New borrowers are defined as students with no outstanding federal loan principal balance when they take out a new loan after July 1, 2013. Transferring between programs does not reset loan eligibility.  Interest not paid will be capitalized, effectively increasing your loan principal upon repayment.

For more information, visit the Federal Student Aid website.
 

Attention undergraduate U-M students approaching graduation: If you are enrolled less than full-time during your final term, you may not be eligible to receive the full, annual maximum federal loan limit. Your loan eligibility may be subject to proration. Consult with an aid officer to discuss your specific situation or if you have questions.

— Borrowing Limits for Direct Stafford Loans —

  Subsidized Loan Base Amount

Additional Unsubsidized Loan Amount
(as of July 1, 2012)

For All Undergraduates For Graduate Students* For Dependent Undergraduates** For Independent Undergraduates*** For Graduate Students
First Year $3,500 N/A $2,000 ($5,500 total) $6,000 ($9,500 total) $20,500
Second Year $4,500 N/A $2,000 ($6,500 total) $6,000 ($10,500 total) $20,500
Third Year and Beyond $5,500 N/A $2,000 ($7,500 total) $7,000 ($12,500 total) $20,500
  Subsidized Loan Debt Limit Total Loan Debt Limit (Subsidized* + Unsubsidized)
$23,000 $65,500; limit includes Direct Loans received as an undergraduate $31,000 (only $23,000 can be subsidized) $57,500 (only $23,000 can be Subsidized Loan) $138,500 (only $65,500 can be Subsidized* Loans); limit includes Direct Loans received as an undergraduate

*Graduate/professional students no longer eligible for subsidized Direct Loans for loan periods beginning on or after July 1, 2012.
**Excluding students whose parents are unable to obtain a PLUS Loan
***Or dependent students whose parents are unable to obtain a PLUS Loan

(return to top of page)

COMPLETING YOUR LOAN REQUIREMENTS

If you have a Direct Subsidized or Unsubsidized Stafford Loan, 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 NOTE

Parents and students who are borrowing for the first time through the Direct Loan Program must complete a Direct Loan Master Promissory Note (MPN) in order to receive their loan funds. The MPN authorizes the University of Michigan 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 the duration of your University of Michigan education. (If you sign a Master Promissory Note one year and do not want additional loans, you must decline the loan the following year or it will be paid out to you.) Also, If you have accepted other federal loans (e.g., Perkins, Health Professions, or Nursing Loans), you will need to complete separate promissory notes for those loans. The Office of Financial Aid will notify you of how to complete them. 

How to Complete an MPN

In order to receive your Direct Loan funds in a timely manner, complete the MPN online at StudentLoans.gov. When you complete the MPN online, you receive a confirmation number immediately so that you know immediately that the federal government (the lender) has received and accepted the MPN.

Before completing the MPN, be sure you have collected this information:

  • A Department of Education PIN Number: You will need to have a PIN number issued from the U.S. Department of Education to complete the MPN on the web. If you do not already have a PIN number, you should apply for one immediately. It takes up to 3 business days to receive your PIN information by email and 7-10 business days to receive it by regular mail. If you already have a PIN number, but you cannot locate it, click here. (Note that your PIN is NOT the same as the DRN number shown on your Student Aid Report.)
  • Your Social Security Number
  • Your permanent address and telephone number
  • Your driver's license number
  • Names, addresses, and phone numbers for two references

To complete your MPN online:

 Go to StudentLoans.gov

 Sign in under Manage My Direct Loan. (If you are a new Direct Loan borrower, follow the instructions for applying for a PIN.)

 After signing in, select Complete MPN and follow the instructions.

 Be sure to select the correct name and address for the University of Michigan:

University of Michigan-Ann Arbor
503 Thompson Street
Ann Arbor, MI 48109-1340 - G02325

 Review the What You Need and What to Expect sections of the website (under the Learn More menu). If you need technical assistance, click on Contact Us.

If you prefer, you may complete a paper copy of the MPN instead, but there are more steps involved before your Direct Loan can be approved and disbursed, which could cause delays in receiving your loan funds. To complete a paper MPN, sign in at StudentLoans.gov; then select Complete MPN to complete the MPN electronically or Print MPN to print, complete, and mail a paper MPN.

 ENTRANCE AND EXIT COUNSELING

Entrance Counseling

If you are a first-year undergraduate or graduate student and a first-time Direct Loan borrower, you must complete Direct Loan Entrance Counseling on the U.S. Department of Education's StudentLoans.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

Direct Loan Exit Counseling 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 PIN to access this counseling session. To complete the Exit Counseling session, go to the StudentLoans.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.)

The U.S. Department of Education has additional information that may help to explain Direct Loan online counseling. Click on the links below that will download as PDFs for reading, saving or printing.   

Direct Subsidized Loan Time Limitation:  Effective July 1, 2013, first-time and new Federal Direct Subsidized Loan borrowers will have a time limit on how long they can receive Direct Subsidized Loans. More information can be found here.

RECEIVING YOUR LOAN FUNDS

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).

 (return to top of page)

 

 

 

STUDENT EMPLOYMENT OFFICEUNIVERSITY OF MICHIGANWOLVERINE ACCESSPORTAL EN ESPAÑOL
SITE MAPDISCLAIMERFEDERAL SCHOOL CODE 002325CSS PROFILE CODE 1839© 2014 Regents University of Michigan
Office of Financial Aid * 2500 Student Activities Building, 515 E. Jefferson, Ann Arbor, MI 48109-1316 * Tel 734-763-6600 * Fax 734-647-3081 * financial.aid@umich.edu
Login