Student loans have become such an accepted aspect of paying for college that most people, including students and parents, don’t even think about the financial implications of taking out student loans.

But it’s important to understand what student loans are and what they can do to your finances.

In fact, you may be surprised at what you might not know about student loans —and what can happen if you take them out without fully understanding them first.

Here are some facts that everyone should know about student loans before they take them out. (And I mean everyone—students, parents, and future college students.)

What you might not know about student loans

1) Private Student Loans Can be Optional

Borrowing money for school is a big commitment, and it’s important to do your research before making any decisions.

Private student loans can be optional for some, but not all. Here are some facts about private student loans that will help you better understand them:

✓) Private Student Loans are not always the best option, especially if you have a federal loan available to use as well.

✓ ) Private Student Loans may also come with higher interest rates than other forms of loans, so make sure you compare them side-by-side before taking out any type of student loan.

✓) It can take up to two weeks for funds from a private lender to be sent to your college or university, which could lead to late fees.

2) Interest Rates Are More Expensive Than Credit Cards

For people who are serious about paying off their debt, the interest rates on credit cards is a better option than the rates on federal and private student loans.

Credit card interest rates average around 14 percent, whereas the average federal loan rate for undergraduates is 6.8 percent and the average private loan rate for undergraduates is 10.5 percent.

3) Repayment Periods Are Short

When it comes to student loan repayment periods, most people think of them as being 10-25 years. However, there are actually a variety of repayment periods for federal student loans.

The standard payment period is 10 years, but some borrowers may be eligible for 5-, 7-, or even 20-year repayment plans.

The income-driven repayment plan caps the monthly payment at a certain percentage of the borrower’s discretionary income and offers forgiveness after 25 years.

The Pay As You Earn (PAYE) program caps the monthly payments at 10% of discretionary income and also offers forgiveness after 25 years.

4) Consolidation Is Common

Consolidation is a way to combine all of your federal student loans into one loan with a single monthly payment.

This can often lower your interest rate and make it easier to manage your payments. You can also consolidate with private lenders, but the benefits may be different. Private consolidation should always be done through a qualified lender.

Income-Based Repayment Plans: Income-based repayment plans help borrowers keep their payments affordable by basing them on their income, family size and other factors rather than just on their outstanding balance.

5) The Loan Servicer Has Access to Your Tax Refund

If your income is low enough that you don’t need to file a tax return, the government will give your loan servicer access to your income-tax refund.

The servicer can then use this money to pay down your loan balance.

However, if your income level changes and you do need to file a tax return in order to receive a refund, it could take up to 120 days for the IRS and Department of Education to update their records so that they are not overpaying or underpaying interest on your behalf.

Furthermore, if you have other debts owed or assets owned (such as cars), these creditors may be able to garnish or seize these items from you before any funds from your taxes are applied.

6) Borrowers Have Their Loans Forgiveness Options

Borrowers have their own set of loan forgiveness options to help them get out from under the weight of their debt. Some are more accessible than others, so it’s important to understand what they are and what they can do for you.

The Department of Education has several programs that will forgive a borrower’s federal student loans after they work full-time in public service jobs.

The Public Service Loan Forgiveness Program is available to those who work at least 30 hours per week or meet other criteria as listed on the Federal Student Aid website.

7) A Large Percentage Of Borrowers Default On Their Loans

One of the most shocking statistics is that a large percentage of borrowers default on their loans. In fact, according to the Congressional Budget Office, around 40% of all federally subsidized Stafford loan borrowers defaulted within 12 years.

Default rates are much higher for Parent PLUS Loans with 65% defaulting within 12 years.

The government will then garnish wages, seize tax refunds and offset Social Security payments in order to recoup the unpaid amount.

8) Most Borrowers Owe a Lot of Money by Age 30

83 percent of undergraduate borrowers owe at least $30,000 by age 30. Forty-one percent owe more than $50,000. In total, 75% of the class of 2016 had debt in excess of $30,000.

Thirty-seven percent owed more than $100,000 when they left school and 8% owed over $200,000. The average amount owed among this group was $37,172.

The mean amount that these bachelor’s degree recipients still owe on their federal student loans is now around $27,000 (for those who borrowed).

But many are likely to have an even higher burden due to private borrowing for college costs and interest accrued since graduation.

9) Types Of Repayment Plans Include Income-Based, Standard, & Extended

Income-based repayment plans base your monthly payment on how much money you make. The more money you make, the higher your monthly payment will be.

When income-based repayment plans were first introduced, it was only for federal loans. Now, a growing number of states offer similar programs for their residents.

10) You May Need To Submit Taxes To Get Approved For A Loan

If you need a loan to help pay for college, there is a possibility that the IRS will require you to submit your taxes before approving the loan.

If this is the case, it’s important to make sure that your tax return doesn’t show any red flags and won’t prevent approval of the loan.

Your lender will also request information from you regarding past due balances on credit cards, delinquent debts owed to other parties and more.

If all of the information submitted matches up with what the lender has in their records, they can approve the loan.

However if anything looks out-of-place, or if they have questions they may contact you to ask for clarification.

The final decision on whether or not they can approve your application rests with them so be prepared to answer questions if needed!