Direct Loans

The U.S. Department of Education offers low-interest loans to eligible students to help cover the cost of college or career school.

In the Direct Loan Program, you work with the Office of Financial Aid & Scholarships at the University of Michigan-Dearborn and the Direct Loan Program of the U.S. Department of Education. 

UM-Dearborn Code of Conduct for Student Loans

Once your Direct Loan has been originated, it will be serviced by a select group of loan servicers who are committed to helping student borrowers.  While your servicer be the agency that you contact for information about deferments, payments, and trouble in repaying your loan, your loans are still owned by the U.S. Department of Education through the Direct Loan Program.

Do you know who your loan servicer is?  You should establish your account access online once you receive your initial contact.  If you don't know who your servicer is, visit and click on the LOG IN button and access My Federal Student Aid. You will need to enter some basic identity information and you will be able to contact information for your servicer, but also how much you have borrowed as well as interest accrued to date.  Great information and easy for you to access! Easy to read display of information.

What are Direct Loans and the difference between subsidized and unsubsidized loans?

Who is eligible and how do I apply?

You must meet the general eligibility requirements for all Federal student aid programs. To view these requirements, please review the student status eligibility  from the Federal Student Aid website. You apply by completing the Free Application for Federal Student Aid (FAFSA).

First time borrowers in the Direct Loan Program are also required to complete Entrance Loan Counseling and a Master Promissory Note (MPN) at Your FSA ID is required to access the secured website.

You must also accept your Federal Subsidized Direct Loan and/or your Federal Unsubsidized Direct Loan on Financial Aid & Scholarship Self Service to notify the Office of Financial Aid & Scholarships that you wish to borrow and how much.  We do not make assumptions that you want to borrow--it is an important decision--and the decision making and actions required are yours.

Instructions on how to accept your student loan on can be reviewed on Award Management.

How much can I borrow?

Loan limits are determined by grade level and dependency status.

Annual and Aggregate (Total) Loan Limits for Direct Loans

(0-24 credits)
$5,500 (only $3,500 can be in subsidized loans) $9,500 (only $3,500 can be in subsidized loans) Up to $20,500 in unsubsidized loans
(25-54 credits)
$6,500 (only $4,500 can be in subsidized loans) $10,500 (only $4,500 can be in subsidized loans)  
Juniors and Seniors
(55 credits and above)
$7,500 (only $5,500 can be in subsidized loans) $12,500 (only $5,500 can be in subsidized loans)  
Maximum Total Debt From Stafford Loans Upon Graduation $31,000 (only $23,000 can be in subsidized loans) $57,500 (only $5,500 can be in subsidized loans) $138,500 (only $65,500 can be in subsidized loans)

Graduate loan debt will also include all Stafford Loans received as an undergraduate.

How are loan funds disbursed?

After accepting your loans online on the Financial Aid & Scholarship Self Service portal and completing the federal requirements of loan counseling and the Master Promissory Note, loan funds will be applied to your tuition account electronically as early as ten days prior to the start of the semester.  Aid is disbursed on a semester-by-semester basis. 

If your financial aid exceeds the amount of your tuition, you are eligible for a refund. Enroll in the direct deposit program at the Student Accounts website.

Can I cancel or reduce my loan after accepting it?

If your loan has not disbursed, you can complete a new Student Decision Form or email your request to Although students can accept their loans online at the Financial Aid & Scholarship Self Service, changes cannot be made online.

If your loan has disbursed, you will receive email notification of disbursement from the Office of Financial Aid & Scholarships.  You must contact the Office of Financial Aid & Scholarships in writing (post or email) within 14 days of disbursement to cancel or reduce your loan. Cancelled loan funds will be remitted to the Direct Loan Program.
It is important to remember that the cancelation or reduction of a loan does not change a tuition obligation at the University. If your other forms of financial aid do not cover all of your tuition, you will be responsible for meeting any outstanding tuition obligation.

Federal Loans Interest Rates

Federal Loan Origination Fees

Loan fees have had small reductions for loans disbursed on or after October 1, 2020 and before October 1, 2022.

  • The loan fee for Direct Subsidized Loans and for Direct Unsubsidized Loans will be 1.057%
  • The loan fee for Direct PLUS Loans (for both parent and graduate and professional borrowers) will be 4.228%

When do I repay my loans and what are the terms?

After you graduate, withdraw or drop below half-time enrollment status, you will have 6 months before you begin monthly repayment. This is called your grace period.  During the grace period for all Direct Loan subsidized loans, no interest will accrue for the borrower.

  • Before graduation, you will be required to participate in Exit Loan Counseling online.  This process will be helpful in making a decision about your repayment plan.
  • Your loan servicer will provide you with information on their general and secured website, by email and/or by letter.
  • The Direct Loan Program offers you a choice of repayment plans.  You may also change your repayment plan.
  • For the most up-to-date information on repayment plans, please visit the Federal Student Aid website.

Can loan payments be postponed or loans forgiven?

Under certain conditions, you can receive a deferment or a forbearance as long as your loan is not in default. A deferment allows the temporary postponement of payment.

One of the most important parts of your Entrance Loan Counseling and your Exit Loan Counseling discusses the situations in which these options would apply. You may wish to visit the Federal Student Aid website for information and forms for deferments and forbearances, and other special circumstances for borrowers, including cancellation, forgiveness or discharge of loans.

What happens if I don't repay my loan?

Failure to repay a loan according to the terms agreed to when you signed promissory notes will result in a status called default. In many cases, default can be avoided by submitting a request for deferment, forbearance or cancelation and by providing the required documentation before you reach the point of default.

The consequences of default are severe. Action may be taken to recover the money, including notifying national credit bureaus of your default. This will affect your credit rating for a long time. For example, you may find it very difficult to borrow money from a bank to buy a house or a car. In addition, if your account is turned over to the U.S. Department of Education for collection, the Internal Revenue Service (IRS) might withhold any U.S. individual income tax refund and apply it to the amount that you owe, or the agency holding your loan might ask your employer to deduct payments from your paycheck. In addition, you are responsible for the expenses in collecting the loan. If you decide to return to school, you will not be eligible for any additional Federal student aid until your loan has been repaid or you have made satisfactory payment arrangements (and kept them.) You may even face legal action.

Office of Financial Aid & Scholarships

1183 - University Center
4901 Evergreen Road
Dearborn, MI 48128
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