The student loan process—including its acronyms, terms and rules—can be daunting. Getting a handle on the central concepts will help with borrowing choices now and the repayment process down the road. These common student loan terms are a good place to start.

The Free Application for Federal Student Aid, or FAFSA, is a government form that students or their parents must complete to be eligible for government-provided benefits—things like state grants, work-study funds and federal student loans.

A co-signer is a person, often a parent or guardian, who agrees to repay the loan if the student doesn’t. Private student loans may require a co-signer. It’s important to remember that a co-signer is as responsible for loan repayment as the student. Missed payments or defaults will show up on both of their credit reports.

When taking out any loan, there are two primary elements—the principal and the interest. The principal is the amount you borrow and will need to pay back. The interest is what the lender is charging you for the loan. Interest is calculated as a percent of the principal. The interest rate on a federal student loan is set by Congress through legislation. The interest rate on a private student loan is set by your lender and can be affected by a variety of things, including your credit history, whether you have a co-signer, the type of loan and the length of repayment.

Generally, loans with lower interest rates will cost you less over the course of your repayment term than those with higher interest rates.

The origination fee is what the lender charges for processing your student loan. For most federal loans, the fee is 1.057 percent of the loan amount (4.228 percent for PLUS loans). Many lenders don’t charge origination fees for private student loans.

Federal student loans are funded by the government and offer several flexible consumer benefits that make them the go-to option for most student borrowers. Federal student loans tend to offer greater repayment flexibility than private loans. For example, you may be able to delay payment up to 12 months in the event of economic hardship, as well as modify your monthly payment amount to better suit your income level.

Federal student loans generally fall into one of two categories: subsidized or unsubsidized.

Federal PLUS loans are available to graduate students and parents of dependent undergraduate students. The Department of Education acts as lender, and your ability to borrow will depend on your credit history, as well as your eligibility for federal student aid. These loans are often paid directly to the school to cover expenses like tuition and room and board; if there is money left over, it will be given to you. The maximum loan amount is the cost of attendance minus any other financial aid received.

Private student loans are offered by private lenders, such as banks or schools. Generally, these loans don’t include as many financial benefits and protections as federal student loans. With private loans, you may be required to apply with a co-signer, and you may face variable or higher interest rates based upon your creditworthiness. When it comes time to repay your loans, you may have fewer options to delay or decrease your monthly payments. While private student loans may appear to be a less-attractive option than federal student loans, they can help borrowers fill the financial gap between what the government lends them and the total they need to cover the cost of attendance.

Deferment is a temporary pause in student loan payments for a specific reason, such as attending college, active-duty military service, unemployment or cancer treatment. If you are enrolled at least half time, in-school deferment can be automatic. Otherwise, you must apply for a deferment with your loan servicer and continue making payments until the deferment is approved.

Deferments can last as long as three years. If your loan is subsidized, you won’t pay interest during the deferment period. If it is unsubsidized, interest continues to accrue and is added to your loan balance.

Forbearance allows you to postpone student loan payments if you’re facing financial hardships. For federal student loans, the forbearance period can last up to a year. Interest continues to accrue on both subsidized and unsubsidized loans and may be added to your balance.

Your loan is delinquent if you don’t make a payment by its due date. If payment isn’t made in 90 days, the delinquency is reported to the three major credit bureaus. It will show up on your credit report and likely will bring down your credit score. If you foresee being unable to make your monthly payments, contact your loan servicer as soon as possible to explore repayment options and avoid default.

Default is the failure to repay your student loans. For most federal loans, you’re considered in default if you haven’t made a payment in 270 days.

If you default on a federal student loan:

1. Your wages may be garnished to cover the debt
2. Any tax refunds or Social Security checks may be applied to the loan
3. The default will go on your credit report, and your credit score may take a big hit, hurting your chances to get future loans, such as a mortgage

The procedures for defaults on private student loans vary by lender. The lender may hire a collection agency or take you to court. As with federal loans, default on private student loans will damage your credit score.

Consolidation combines multiple federal student loans into a single loan with new terms. It can be a good way to simplify and lower your monthly payments. The interest rate on the new loan will be the weighted average of the rates on the individual loans. The downside is you may end up paying more in interest over the life of the loan. That’s because the new lower payments are spread out over a longer period of time. You can apply to consolidate your federal student loans on the Federal Student Aid website. The site also has tools to help you decide if consolidation is right for you.

Consolidating student loans:

For private student loans, consolidation is also called refinancing. Unlike the federal program, you may be able to reduce your interest rate if your credit score is good. Be sure you shop around and compare rates.

This program may forgive all or part of your federal student loans if you can show the school intentionally misled you about the education it would provide, violated state laws or closed down before you could complete your education. The borrower defense does not apply to private student loans.