College is expensive and U.S. student loan debt is up to $1.2 trillion dollars*. That is $1,200,000,000,000. If you were to live another 50 years, you could spend $54 million dollars every day and still have money left over.

That’s a lot of money and it must seem like everyone is getting help when it comes to paying for college, but where do you draw the line? What are the pro’s and cons of financial aid and the differences in federal and private loans?

There are many different types of these loans and terms. Some charge interest while you are in school and others don’t charge interest until you graduate. Here’s the breakdown:

Stafford Loans– These are more common than Perkins loans and the money comes straight from the federal government to the student. There are two types of Stafford Loans, subsidized and unsubsidized.

Subsidized loans are typically for students who have a financial hardship and payments aren’t required until after graduation. The government will pay for the interest accrued while you are in school. Undergraduates can’t accrue more than $23,000 over the course of their studies, so this might not cover all of your expenses for 4 years.

Unsubsidized loans do require that you pay off the interest. The interest does build up at a fixed rate of 4.66 percent while you are still going to school. Payments can and typically are deferred until after graduation. All students are eligible for this type of loan.

Perkins Loans– These are typically better than Stafford loans but have higher qualifications for them. The interest rate is at a fixed 5 percent and the government pays for the interest while you are going to school and for a while after you graduate as well. These types of loans are for students with heavy financial need. Although the government pays for them, they are distributed to the schools and the school in turn decides who is eligible.

PLUS Loans– These are government loans created for parents and graduate students. They have a fixed interest rate of 7.21 percent. These are also funded by the federal government however they have no maximum amount.

Private Education Loans– This is an alternative option to federal loans and the funds are provided by private lenders. Eligibility is typically dependent on credit history. Interest rates are usually higher than federal student loans so be cautionary of that when applying!

Make sure that you do your research before agreeing to federal aid! Know how much it will cost in the long run. If you don’t have great options, try skipping a semester to save money until you can afford it. Remember that college isn’t a race and you will be a lot happier with less debt after you graduate.

*https://www.debt.org/students/