Few people land a free ride through college by being a star athlete or class valedictorian. But college can be very costly and you (and possibly your parents) are going to have to pay for it--potentially with student loans. These loans are often both a necessary and dreaded part of college. But just because no one likes them doesn't mean you can't understand them, and you need to if you're going to make the right decisions when it comes to taking on thousands of dollars in debt.

Before diving into student loan debt, take time to apply for as many scholarships and grants as possible--free money is better than borrowed. Also, carefully choose the school you will attend (i.e. community colleges and public universities are usually good values). Visit sites like collegeboard.com, students.gov, scholarships.com and studentaid.ed.gov to compare schools and find grants and scholarships. Only consider student loans after exhausting free-money possibilities.

Start by completing a Free Application for Federal Student Aid (FAFSA) online at fafsa.ed.gov. This puts you in the running for federal funding (which includes grants, work-study and loans). Some of these are first-come, first-serve, so apply right after January 1 each year (when the application opens). Upon completing the FAFSA, a Student Aid Report (SAR) will be sent to you and the schools you listed on the FAFSA. The SAR lists all the information on the FAFSA (check for errors) and includes the Expected Family Contribution (EFC). The EFC determines what you and your parents will need to contribute and your eligibility for federal student aid. Your school also uses the SAR and EFC to determine how much school or state financial aid you're eligible for.

By submitting the FAFSA, you apply for all federal student loans (along with federal grants). Federal loans are distributed through either the Federal Family Education Loan (FFEL) Program or the William D. Ford Federal Direct Loan Program. The difference is that in the Direct Loan Program the U.S. government is the lender, but in the FFEL Program the federal government uses private lenders to finance the loans (which are guaranteed by the government). The three types of available loans are Stafford Loans, PLUS Loans and Perkins Loans.

Stafford loans are for undergrad and graduate students and PLUS loans are for students' parents, graduate students and professional degree students. Stafford Loans are distributed as subsidized or unsubsidized loans. With subsidized loans the lender pays the interest during school. With unsubsidized loans, you're responsible for the interest as soon as the loan is issued, making subsidized loans the better option. PLUS Loans are always unsubsidized.

Perkins Loans are low-interest loans for undergraduate and graduate students with "exceptional" financial need. The school is the lender. You can receive up to $5,500 a year as an undergraduate and up to $8,000 as a graduate or professional student. The amount received depends on financial need and the availability of funds at the school. With any federal loan, payments will be disbursed to the college directly and any extra after tuition and fees is paid back to you. If federal loans aren't enough to pay the bill, another option is private student loans.

In 2007 - 2008, almost $20 billion in private student loans were taken out in the U.S. These loans originate with financial institutions and other student loan lenders. Because these loans are made directly by an institution, approval is based on their guidelines, which vary, and your (and/or your cosigner's) credit score. Fees and interest rates (which are usually higher than federal loans) are also based on your credit score. Before signing up for a private loan, pay special attention to these things:

1. What rate are they charging?
2. When does repayment start, and how much will my payments be?
3. Do I need a cosigner?
4. Are there any fees for taking out or repaying the loan?

With a private student loan, you're dealing directly with the lender and are subject to their terms and conditions. To find private lenders, check with your financial institution or search for "private student loans" at finaid.org.

Federal loan repayment usually begins six to nine months after graduation (private loan repayment agreements vary). Luckily many schools and lenders offer exit counseling to graduating students (in fact, it's required for Direct Loan borrowers) to clarify the many repayment terms and options available. Whether a loan is federal or private will determine repayment options. If you take out a private loan, contact the lender for details.

According to the U.S. Department of Education, there are six repayment options available to federal loan borrowers.

• Standard Repayment Plan: Fixed monthly payments of at least $50 are paid over a term not to exceed 10 years.
• Graduated Repayment Plan: Monthly payments are paid over a term not to exceed 10 years, starting with a relatively low amount and then increasing every two years.
• Extended Repayment Plan (Direct Loans only): Monthly payments are based on either a fixed annual or graduated amount to be paid over a term not to exceed 25 years. You must have over $30,000 in outstanding Direct Loans to qualify.
• Income-Based Repayment: Monthly payments are based on income during any period when you have financial hardship. Monthly payments may be adjusted annually and the repayment term can exceed 10 years. When the repayment term ends, you may qualify for forgiveness of any outstanding loan balance.
• Income-Contingent Repayment Plan (Direct Loans only): Monthly payments are calculated annually based on income, family size, and the total Direct Loan amount. Borrowers have up to 25 years to repay under this plan, and the unpaid portion will be forgiven.
• Income-Sensitive Repayment Plan (FFEL Loans only): Monthly payments are based on annual income. As income increases or decreases, so do payments. The maximum repayment term is 10 years.

After school, choose whatever payment plan fits. If your financial situation changes for the worse, contact the lender and ask about deferment, forbearance, or altering the repayment plan.

Because student loans are reported on credit reports, ensure that payments are made on time. Doing this will keep you in good standing with the lender, steadily reduce college debt, and keep your credit score healthy. 

Sources: collegeboard.com; finaid.org; moneycentral.msn.com; ed.gov; credit.com; fafsa.ed.gov; und.edu; scholarships.com; salliemae.com