Each year two fifth year students are chosen from each house - one male and one female - to become House Prefect, and are given a badge (which apparently Percy Weasley was extremely proud of). As a Prefect their job is to help the first years out, starting by showing them their Common Room and dormitories and sharing the house password the first day of school. They also keep an eye out for trouble, and can report to the teachers.
They also have a compartment on the Hogwarts Express, and their own bathroom (which Harry uses in the Goblet of Fire after Cedric advises him to take a bath with the Golden Egg). It seems Quidditch Captains can also use the Prefects bathroom, from what Hermione says in the sixth book once Harry becomes captain.
Some known Hogwarts Prefects include: Percy Weasley (Gryffindor), Penelope Clearwater (Ravenclaw), Hermione Granger (Gryffindor), Ron Weasley (Gryffindor), Draco Malfoy (Slytherin), Pansy Parkinson (Slytherin), Remeus Lupin (Gryffindor), and presumably Bill and Charlie Weasley (Gryffindor), since Molly Weasley comments on everyone in the family being prefects when Ron gets his badge (to which one of the twins replies with "What are we, next-door neighbours?")
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