The federal government spends $23 billion on higher education tax credits, but nearly 40 percent of undergraduates are not eligible to receive them.

The Washington Post reports.

Paying for college? Have student loans? Here’s what you need to know before filing your taxes.

Gather up your W2s. It’s tax time! Actually, you probably need a few more forms than just a W2, especially if you have student loans or you’re paying for college. There are all sorts of education tax credits and deductions, but there are also a couple of things you need to keep in mind before you try to claim them.

Class Credit: Let’s start with the fun part, saving money. Education tax credits and deductions can reduce the amount of money you owe or improve your chances of getting a refund. There are two types of credits: the American Opportunity Tax Credit and the Lifetime Learning Credit.

The AOTC offers a maximum annual credit of $2,500 per student for the first four years of college. It can be claimed by parents paying for their child’s undergraduate degree or by working students paying their own way through school. Either way, the student must be enrolled at least part-time in a program leading to a degree or certificate to qualify. The credit can be applied to books, supplies, tuition and fees. To get the full credit, a single taxpayer must make less than $80,000, but for partial credit you can make up to $90,000. Married filing jointly? Your combined income must be less than $160,000 for the full credit, or $180,000 for partial credit.