The Scarlet Knights fell short at the free throw line with a 7-14 clip as Michigan finished the game on a 20-10 run.
"Every loss is a lost opportunity because we're as good as any team in this league," said forward Kadeem Jack, who scored 13 points in 40 minutes.
Guard Myles Mack led Rutgers (10-10, 2-5) with 15 points and eight rebounds in 39 minutes of action.
"We didn't do enough things to give ourselves a chance at the end," said coach Eddie Jordan. "When you miss free throws, miss plays, turn the ball over and you miss assignments defensively and give up threes, then ... we played hard, but you have to play hard and smart to play well."