A college education is a golden opportunity to learn the trade that interests you, improve your abilities to excel at your passions, and position yourself to succeed in this competitive world. A college education opens doors. Unfortunately, college is expensive. Well over half of this country’s college students take out loans in order to attend school and earn their degree. And then they spend many years—often on a 30-year plan—slowly paying off their loans, plus interest. If you follow your undergraduate degree with a graduate program, your loans can easily reach the six figures. It is not a pleasant situation, but in order to most efficiently deal with it—that is, pay as little interest and late fees as possible—you need to be armed with knowledge. Here are the most important facts to know about student loans.

Types of Loans

There are federal (government) loans and private loans.

Federal Loans

Federal loans offer low interest rates, can be consolidated, and do not require credit checks. The most common federal loan is the Stafford Loan, and it is offered as subsidized and unsubsidized.

Subsidized means that you are not responsible for any interest that accrues while you are in school and for a grace period following graduation, usually six months. You must demonstrate financial need to qualify. There is a limit to how much of a subsidized loan you can take. Once you hit your limit, you will need to take an unsubsidized loan on top of the subsidized loan. Interest will accrue while you are a student, and will add onto the debt you will need to pay back either during school or after you graduate.

The Perkins Loan is another kind of federal loan. It is subsidized, offers a lower interest rate and is more desirable. But it is reserved for students with significant financial need. The government gives a fixed amount of Perkins Loan money to a college, and the college decides who to award the loan money to.

Private Loans

If you reach your federal loan limit, you may need to turn to a private institution for a loan. Similar to any sort of loan, such as a mortgage, the institution will run a credit check and will determine your interest rate according to your perceived risk. Interest rates vary per lender, so you’ll want to shop around.

Loan Forgiveness

Some jobs, particularly those in public service such as government and non-profit, offer loan forgiveness. In other words, the balance that you owe on your loan will be wiped out. This is useful to know, particularly if your interests lie in that direction, or if you are on the fence about what to study. However, loan forgiveness only kicks in after you’ve made 120 payments on time. That’s ten years of payments. In this case, you would want to make the lowest monthly payments possible in a timely fashion. You should also know that loan forgiveness is not available to students on private loans. Just federal loans.

Consolidation

Depending on how much money you need to borrow in order to attend school and cover living expenses, you may have a number of loans. It can be a great idea to consolidate student loans into a single payment. You cannot consolidate private loans with the federal. Consolidation can help you lock in a low interest rate across the board. Streamlining your payments will help you avoid late payments and fees. It will simplify your life.

Trouble Paying Loans Off?

Everyone has trouble sometimes. What if you are suddenly unemployed and can’t make your monthly loan payments? What if you’ve had an accident and medical bills are eating into your loan payments? Things of this nature happen. In these cases, you can qualify for extended payment plans that lower your payments (though more interest may accrue). You may also qualify for forbearance, meaning you can take a break from making loan payments for up to twelve months (though interest continues to accrue).

Having debt is not an ideal situation, but a good education is powerful and priceless. Many people view their educations as investments that will pay off over time. But be smart and educate yourself on your loan options rather than just taking the first one you find.