Waiting tables and working summers for a surveying firm gave David Hilmer a nest egg to help pay for college at the University of Wisconsin, Madison. But although the money he saved was a good start, it was far from what we needed.

"After about a year and a half, I was scrambling--how was I going to cover my dorm expenses and tuition?" he recalls. Now working as the director of business development at Little Tornadoes, an Internet consulting firm in New York City, Hilmer says that without numerous student loans (a federal Perkins, Stafford, and a university loan) he might not have been able to graduate.

More than ever, students are now relying on loans to help pay for college. Two-thirds of undergraduate students are in debt when they graduate from college, according to the National Postsecondary Student Aid Study conducted by the National Center for Education Statistics and the U.S. Department of Education.

To make smart decisions about borrowing, you need to plan ahead and understand what your options will be when it comes time for repayment. Here are some simple guidelines that apply to the major federal loan programs--the Perkins, the Stafford, the PLUS--as well as independent bank loans. (For more specifics on programs, see page 12.)

Set a Limit.

Keep in mind that every dollar you borrow must be repaid--with interest--which can really add up over a long repayment term. (See chart on page 21 for examples.)

"It's easy to think now that a $200-a-month payment won't be a big deal," says Hilmer, "but those payments can take a big chunk out of your monthly income. Most high school students don't realize how many bills they're going to have when they live on their own."

To get some idea of how much is too much, you need to estimate how much you'll be able to pay back once you graduate. That involves examining your future salary and expenses.