MONEY College

How to Use the GI Bill to Pay Your Kid’s College Tuition

476803567
Ariel Skelley—Getty Images

Parents who don't use the benefits for their own education can transfer them to their kids.

Ingrid Bruns admits that she and her husband, Arch, probably didn’t save as much for their two daughters’ college educations as they should have. Though the couple is careful with their money (Ingrid became an Accredited Financial Counselor while living overseas as a military spouse, and now serves as director of Military Life Advice at USAA), college savings took a back seat to other savings goals, including the “forever home” they recently purchased.

“We both used personal savings and worked our way through college, so we assumed our kids would do the same,” she says. But college costs have increased dramatically since she and her husband earned their degrees, and their approach simply isn’t feasible for their daughters, one of whom is a college freshman and the other a junior.

But the Bruns family doesn’t have to scramble as much as some, because they have one ace in the hole: the Post 9/11 GI Bill. Arch’s career in the Air Force earned him benefits through this valuable program, and because he hasn’t used them himself, he was able to transfer them to his daughters.

Check out the new MONEY College Planner

The Post 9/11 GI Bill benefits include up to 36 months of tuition and fees, a monthly housing allowance and a books and supplies stipend of up to $1,000 a year. For servicemembers to be eligible to use these benefits for themselves, they must have served at least 90 aggregate days on active duty after September 10, 2001, or have been honorably discharged from active duty for a service-connected disability after serving 30 consecutive days after September 10, 2001. (Thirty-six months of service on active duty is generally required to earn full benefits.)

Benefits pay full in-state tuition and fees, and recent changes to the law mean many state schools offer in-state tuition to veterans, even if they otherwise wouldn’t qualify as residents. In addition, benefits may pay up to just more than $21,000 for private schools, and The Yellow Ribbon Program provides additional support for those in college.

The requirements for transferring benefits to a dependent (spouse or child) are different, though, and require planning. Generally, a servicemember must have six years of service, apply to transfer benefits, and agree to serve an additional four years after the transfer is approved. That means parents serving in the military who have children and aren’t sure they will use the benefits themselves are wise to explore their options sooner rather than later.

Joseph Montanaro, a Certified Financial Planner with USAA, offers these tips to military families interested in using the Post 9/11 GI Bill benefits for their children’s educations:

    • Use it yourself first,” he says. “The program was designed to help vets, so take advantage.” The additional training or degree you get may help boost your earning power, which could improve your quality of life and, in turn, allow you to save more for your children’s educations.
    • Transfer early,” he recommends. Because you must commit to an additional four years of service, you want to make sure you elect the transfer as soon as you are eligible. There’s no penalty if you later decide to use the benefits for your own education.
    • Transfer to all,” he suggests. You can divvy up benefits among your spouse and/or children ahead of time, and then change the allocation later, but you can’t add a transferee after you separate from service. “I typically suggest that folks transfer a month to all their potential users (for example, one month to all kids/spouse),” Montanaro says.

With college costs rising, military tuition benefits can be a lifesaver for families trying to pay for college without debt. These benefits, while valuable, are not retroactive. So whether you come from a military family or not, if you already have student loan debt, make sure you explore all your options for student loan repayment. Often the first kind of credit many young Americans have access to, student loans can wreak havoc on your credit if they’re mishandled. This guide has some helpful info on student loan forgiveness programs that can ease or eliminate your debt load as well.

Check out MONEY’s 2015-16 Best Colleges rankings

More From Credit.com:

MONEY

7 Stars Besides Lebron Who Will Pay for Your College Education

These celebs have fame, fortune, and financial aid (for you)

Cleveland Cavaliers forward LeBron James (23) during warmups before an NBA basketball game against the Washington Wizards, Friday, Feb. 20, 2015, in Washington.
Nick Wass—AP

Last week, Lebron James won praise for expanding his charitable efforts to campus. The Lebron James Family Foundation announced plans to pay for four years of tuition at the University of Akron for more than 2,000 students.

While the basketball star’s new program will be one of the widest reaching, he’s hardly the first celebrity to push the “school is cool” mantra—and to put his money where his mouth is.

Dozens of celebrities have created scholarships at their alma maters. Several, such as Alec Baldwin’s new one at the Tisch School of the Arts at New York University or Aerosmith’s for Berklee College of Music students, are pegged to aspiring entertainers. Others, like Lebron’s, are focused on broadly increasing access for at-risk students.

Here are seven of the most generous celebrity scholarships, and what you’d have to do to have a shot at snagging one.

For advice on scholarships and other ways to pay to college, check out the MONEY College Planner.

  • Letterman Telecommunications Scholarship

    David Letterman hosts his final broadcast of the Late Show with David Letterman, Wednesday May 20, 2015 on the CBS Television Network.
    Jeffrey R. Staab—CBS/Getty Images

    One of the best-known celebrity scholarships, David Letterman’s has given money to students at his alma mater, Ball State University, every year since the mid-1980s. Grades aren’t considered, but creativity is, and telecommunications students are required to submit a project to apply. The winner receives $10,000, and there are also smaller checks for two runners-up. More information

  • i.am Scholarship

    Musician will.i.am performs at Goldie Hawn's inaugural "Love In For Kids" benefiting the Hawn Foundation's MindUp program transforming children's lives for greater success at Ron Burkle’s Green Acres Estate on November 21, 2014 in Beverly Hills, California.
    Jason Merritt—Getty Images for The Hawn Foundation

    In 2009, musician will.i.am surprised four students on the Oprah show with money to send them to college. Since then, his i.am.angel foundation has spent more than $800,000 to pay for the tuition, books, and fees of 31 students. The foundation focuses on education and college accessibility for low-income families and underserved communities, like his old neighborhood of Boyle Heights in East Los Angeles. The college scholarship is based on financial need. More information

  • Rhythm Nation Scholarship

    Janet Jackson accepts the ultimate icon: music dance visual award at the BET Awards at the Microsoft Theater on Sunday, June 28, 2015, in Los Angeles.
    Chris Pizzello—Invision/AP

    Janet Jackson’s endowed scholarship with the UNCF gives out awards of up to $5,000 to students at one of the fund’s 37 member schools, all of which are historically black colleges or universities. Recipients have to demonstrate academic achievement or active involvement in their school or community. Bonus opportunity: Janet Jackson’s late brother, Michael Jackson, has a similar scholarship in his name through the UNCF. More information

  • Kevin Spacey Foundation Scholarship

    Kevin Spacey arrives at the 4th Annual Reel Stories, Real Lives Benefit held at Milk Studios on Saturday, April 25, 2015, in Los Angeles.
    Richard Shotwell—Invision/AP

    The acclaimed actor says that people who’ve been successful in their fields have an obligation to “send the elevator back down” to help others reach the same heights. That’s why his awards are tied specifically to performing arts and film programs at two universities: Regent’s University London and Pace University in New York. Eligibility depends on the university and academic program, but in general, there are 13 scholarships available at Regent’s School of Drama, Film & Media that are worth £30,000 each over three years, and seven one-year scholarships at Pace covering $10,000 of tuition. More information

  • Turn 2 Foundation Scholarship

    Former New York Yankees shortstop Derek Jeter (2) before the game against the Boston Red Sox at Fenway Park on Sep 28, 2014.
    Greg M. Cooper—USA Today Sports/Reuters

    Derek Jeter’s foundation, which encourages young people to “turn 2” healthy choices instead of drugs and alcohol, includes at least five college fund programs. For one, the beloved Yankees star teams up with the foundation of another baseball great for the Jackie Robinson/Derek Jeter Scholarship, which provides money and mentors for minority students. Another one, the United Negro College Fund/Sharlee Jeter Scholarship gives $30,000 over four years to students attending historically black colleges or universities. Other Jeter scholarships are defined by geography for students in areas of New York, Michigan, and Florida, and primarily given based on leadership, academic excellence, and participation in extra-curricular activities and community service. More information

  • Shawn Carter Scholarship

    Jay-Z at the 2015 VANITY FAIR Oscar Party held at Wallis Annenberg Center for the Performing Arts, Beverly Hills, CA, on February 22, 2015.
    Nicholas Hunt—McMullan/Sipa USA/Getty Images

    Taking its name from the real one of hip-hop mogul Jay-Z, the Shawn Carter Scholarship Fund gives a number of one-year scholarships. The amounts vary but are generally worth between $1,500 and $2,500. Students must have a minimum GPA of 2.0 and can attend any accredited two-year, four-year, or trade school. The foundation, co-founded by Jay-Z and his mom, says it considers many factors when choosing winners, including leadership, community service, and financial need. More information

  • Kirk Douglas Scholarship

    Actor Kirk Douglas arrives at the 2013 Vanity Fair Oscars Viewing and After Party on Sunday, Feb. 24 2013 at the Sunset Plaza Hotel in West Hollywood, California.
    Jordan Strauss—Invision/AP

    Today’s college students may not all know who film legend Kirk Douglas is—his most famous titles are now more than half a century old—but students at St. Lawrence University can still benefit from his generosity. Douglas and his wife, Anne, have donated $7.5 million to his alma mater for a scholarship they started in 1999. The award, meant to promote diversity on campus, is for students from underrepresented and low-income backgrounds who excel in academics and leadership. It’s a comprehensive scholarship, meaning it covers all tuition, fees, and room and board for four years. More information

MONEY Student Loans

Yay! Now Only 1 In 5 Student Loan Borrowers Are Behind

Improving economy, more flexible repayment plans reduce delinquencies.

The percentage of federal student loan debtors who are behind on their payments, while still shockingly high, is declining, the U.S. Department of Education reported today.

The proportion of borrowers who are more than 31 days late in their repayments fell by more than 2 percentage points, to about 21%, in the last year.

Financial aid experts said that while heartening, that still means that more than 1 out of 5 people whose federal student loan payments are due—because they either graduated or dropped out more than six months ago—are behind on their bills. (The government issues automatic payment deferrals to borrowers who are enrolled in school at least half-time, so current students are not considered delinquent.)

“Declining delinquencies are a good thing,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators. “Whatever the reason for the drop, more borrowers are steering away from the terrible consequences of defaulting,” which are triggered when a borrower falls nine months behind in payments and can result in big fines and long-lasting credit problems, he said.

Check out the new MONEY College Planner

Draeger and other experts pointed to four main reasons delinquencies have fallen:

  • The improving economy has created jobs that are allowing more debtors to earn money to pay back their loans.
  • Families have paid down many other debts and thus can better afford their student loan bills.
  • More colleges are reaching out to graduates to help them apply for the best repayment options, in part because of toughened government penalties against colleges whose alumni have high default rates.
  • More debtors are taking advantage of the government’s “income-driven” repayment plans. The Education Department said that almost 4 million debtors have now signed up for one of the flexible repayment options, an increase of 56% in the last year.

The federal government now offers a dizzying array of income-driven repayment options, but the standard plan adjusts debtors’ payments to 10% of their disposable income. Disposable income is defined as any amount above 150% of the federal poverty line, or $17,655 for a single person. So anyone earning less than that would have their payments waived entirely until they earned more than the cutoff.

The flexible payment plans, while attractive in theory, have been criticized by borrowers and some federal investigators. The Consumer Financial Protection Bureau announced this week that it was looking into borrowers’ complaints about slow processing of applications.

In addition, some naïve borrowers have been shocked to learn that when their payments are waived or are reduced below the cost of the interest, the total size of their loan keeps rising. It is standard practice for lenders of all types to add unpaid interest to a debt. A recent study by the Federal Reserve Board of New York found that about one-third of all student loan borrowers are making payments on time, but the payments are so small that the size of their debt is growing.

The government’s new income-driven repayment plans do offer some hope for such borrowers, however, since those who keep making their payments for at least 20 years (or just 10 years if they work in a public service job) will have any remaining balance forgiven.

Get more college news and advice

 

MONEY

A New Way to Define ‘Affordable’ College

mortarboard with price tag
Sarina Finkelstein (photo illustration)—Shutterstock (2)

Everyone talks about affordability, but what exactly do they mean?

During a higher education hearing on Capitol Hill last month, Lumina Foundation CEO Jamie Meritosis made a telling observation: While nearly everyone agrees that higher education has become unaffordable for many families, few can define what “affordable” actually means.

“It’s an eye of the beholder issue for us right now,” he added later.

Today the foundation, which focuses on higher-ed issues, is out with a suggested formula for determining what’s affordable. It would be the amount families could set aside by saving 10% of their discretionary income for 10 years, plus what students could contribute from working 10 hours a week while in school, or $14,500 over four years at current minimum wage.

Check out the new MONEY College Planner

Most conversations about affordability focus on college prices, then available grant aid, and finally, what students are left to pay, the Lumina paper says. Instead, this “Rule of 10” proposal aims to reverse that by first defining the maximum amount students can reasonably be expected to pay, and then encouraging colleges and policymakers to use that as a guide in setting prices or designing aid programs.

The proposal is set up as a sliding scale, so that families who earn more would be expected to pay more. And in recognition that some families can’t afford to save 10%—or anything, for that matter—those with an income below 200 percent of the poverty rate would be exempt from the savings part of the contribution. (That would be a household income of $48,500 for a family of four, under current poverty rate guidelines.) Following the formula, a family making an average of $100,000 annually would be expected to save $429 a month for 10 years, or $51,500 in total for college costs.

The Rule of 10 was designed to be easily understandable, Lumina says, unlike the complicated formula the federal government currently uses to determine expected family contribution.

But that also means it may be unrealistically simple. There’s little mention of how much families would contribute from current income while a student was in school or what an acceptable amount of loans would be, aside from a suggestion that those families who don’t meet the savings guideline could be expected to make up the difference through current earnings, additional work, or loans. Another option, according to the paper, would be using the same formula to set the maximum amount of loans a student should be expected to borrow.

“The idea behind this framework isn’t to create a one-size-fits all approach, but rather to provide guidelines that can be easily understood and tailored to individual students,” said Zakiya Smith, strategy director at the foundation, in a press release.

To demonstrate that, Lumina compares college costs to housing costs. The general guideline is that housing shouldn’t eat up more than 30% of income. But while that’s a goal, it’s certainly not applicable for every household. The same will be true of college savings, the paper says.

And like housing affordability, agreeing on a definition of affordable is helpful, but it isn’t the same as finding a solution for how to pay for all the costs that go beyond what’s affordable.

MONEY College tip of the day

1 Really Bad Way to Pay for College

hand with envelope of money
Getty Images—iStockphoto

Why you should keep your paws off your IRA.

You may have read that you can take cash from your IRA to pay for college tuition, without incurring the usual 10% penalty on withdrawals made before age 59 1/2. The IRS calls it the “education exception to additional tax on early IRA distributions.”

But just because you can doesn’t mean you should. In fact it’s a pretty dreadful idea.

Among the reasons:

1. You’ll have less money saved for retirement. And not just the amount you withdraw but whatever it might earn, tax-deferred, between now and the time you retire.

2. You’ll still have to pay taxes on the withdrawal. As a result, you’ll net considerably less than you withdraw. Julian Block, an attorney and tax expert in Larchmont, N.Y., gives this simplified example: Let’s say you want to take $10,000 from your IRA. Even if you’re in the relatively low 15% federal income tax bracket, you’ll owe $1,500 in taxes, netting you just $8,500. If your state has an income tax, that will reduce your net further. What’s more, the amount you withdraw will increase your adjusted gross income for the year, which could affect your eligibility for certain tax deductions and even push some of your income into a higher tax bracket.

Note that this applies to early withdrawals from Roth IRAs as well as the traditional kind, although you can withdraw your contributions to a Roth, but not their earnings, at any time without taxes or penalties. The IRS has more details on its website.

Block suggests that if you own a home, taking out a home equity loan might be a better idea. Not only will you sidestep the problems associated with IRA withdrawals, but some or all of the interest you pay should be tax deductible.

“I would look on an IRA withdrawal as an option of last resort,” Block says.

“Before you go ahead with one,” he adds, “first see what rate is available from Tony Soprano.”

For more advice on paying for college, and to create a customizable list of colleges based on criteria such as size, selectivity, and affordability, visit the new MONEY College Planner.

MONEY College

How to Get Into a Great College Without Great Test Scores

150818_COLL_NotGreatScores_GWU
B. Christopher—Alamy Charles E. Smith Center basketball arena, George Washington University, Washington, DC

"Suffering," plus extra essays, can make up for weak ACT or SAT scores.

Even smart, well-prepared high schoolers can flub their college admissions tests, earning scores that significantly understate their ability. Instead of despairing, those students should:

A. Check out the growing list of “test optional” colleges.

B. Build up other aspects of their college applications.

C. Try to improve their scores.

D. All of the above.

The answer, experts say, is D. Here’s advice on getting into your ideal school with less than ideal scores.

Expand Your Search

Poor scores aren’t always deal breakers, since admissions officials say grades are more important indicators of your academic ability. But as a backup, consider the 80-plus private and public colleges that have become test optional—a list that includes such well-known schools as George Washington University, which announced its decision in July. Another 160 or so schools say they recommend that students submit scores but will consider applications without them.

FairTest.org, which tracks test-optional colleges, says there are now at least nine colleges, including popular schools like New York University and Hamilton College, that require scores but are “flexible” about which ones; they’ll allow students to submit, say, International Baccalaureate or Advanced Placement scores instead of the SAT or ACT.

You can search for test optional or flexible schools at Fairtest.org. MONEY’s premium College Planner tool (subscription required) also lets you screen for test optional schools as well as search by 11 other key factors.

If your dream school isn’t on any of these lists, it’s still worth calling its admissions office to ask, says Bob Schaeffer, public education director of FairTest. Colleges’ attitudes are changing so rapidly that more than a dozen schools have reduced their emphasis on testing just in the past year.

Do Something Extra

If your scores are weak, or you choose not to submit them, you’ll need to prove yourself in other ways. Good grades, ideally in tough high-school classes, are crucial. Worcester Polytechnic Institute, MONEY’s highest-ranking test optional school, prefers students who “have suffered as much as humanly possible,” jokes Kristin Tichenor, senior vice president of enrollment management.

Many test-optional schools also ask for graded papers or additional essays, or require interviews with admissions officers.

Try, Try Again

The downside of not submitting scores is that you might lose out on merit aid. So it’s worth calling your top-pick colleges to find out how they calculate aid and whether test scores play a role. It might even pay to retake a test, simply to bring your score up a little.

Nancy Griesemer, a private college-admissions consultant in Oakton, Va., says that many colleges have unpublished scholarship grids with minimum scores for each level of merit aid. Raising an SAT score by a relatively modest 20 points, for example, could mean thousands of dollars more in aid.

Check out the 10 Best Value Test-Optional Colleges

MONEY College

10 Great Colleges That Don’t Care About Your SATs

MONEY's best-value schools where test scores are optional.

You don’t have to get perfect scores on your ACTs or SATs to get into a great college.

Some of the nation’s best-value colleges—including several famous and elite schools—have “test optional” admissions policies. That means they will consider your test scores if you submit them, but they won’t hold it against you if you don’t.

To make up for the lack of test scores, however, you will likely have to submit something extra, such as a graded paper you wrote for high school.

Check out MONEY’s 2015-16 Best Colleges rankings

Here are MONEY’s picks for the 10 best value colleges that welcome applicants who don’t want to submit test scores, below. Then, read our tips on getting into a great school even if you don’t have great test scores.

  • 10. Loyola University Maryland (tie)

    Loyola University Maryland

    Acceptance rate: 58%

    MONEY Best Colleges rank: 109

    Location: Baltimore, Md.

    Read more about Loyola.

  • 10. Bates College (tie)

    Bates College
    Phyllis Graber Jensen—Bates College

    Acceptance rate: 24%

    MONEY Best Colleges rank: 109

    Location: Lewiston, Maine

    Read more about Bates.

  • 9. St. Lawrence University

    St. Lawrence University

    Acceptance rate: 46%

    MONEY Best Colleges rank: 101

    Location: Canton, N.Y.

    Read more about St. Lawrence

  • 8. Union College

    Union College

    Acceptance rate: 37%

    MONEY Best Colleges rank: 96

    Location: Schenectady, N.Y.

    Read more about Union.

  • 7. College of the Holy Cross

    College of the Holy Cross

    Acceptance rate: 33%

    MONEY Best Colleges rank: 89

    Location: Worcester, Mass.

    Read more about Holy Cross.

  • 6. Hobart and William Smith Colleges

    Hobart and William Smith Colleges
    Kevin Colton—Kevin Colton

    Acceptance rate: 49%

    MONEY Best Colleges rank: 75

    Location: Geneva, N.Y.

    Read more about Hobart and William Smith Colleges.

  • 5. Bryant University

    Bryant University

    Acceptance rate: 77%

    MONEY Best Colleges rank: 68

    Location: Smithfield, R.I.

    Read more about Bryant.

  • 4. Providence College

    150819_COLL_NoCareSAT_Providence
    Providence College

    Acceptance rate: 60%

    MONEY Best Colleges ranking: 64

    Location: Providence

    Read more about Providence College.

  • 3. Fairfield University

    Fairfield University

    Acceptance rate: 71%

    MONEY Best Colleges rank: 56

    Location: Fairfield, Conn.

    Read more about Fairfield University.

  • 2. Bowdoin College

    Michele StapletonBowdoin College

    Acceptance rate: 15%

    MONEY Best Colleges rank: 56

    Location: Brunswick, Maine

    Read more about Bowdoin.

  • 1. Worcester Polytechnic Institute

    Worchester Polytechnic Institute
    Matthew Atanian

    Acceptance rate: 52%

    MONEY Best Colleges list: 48

    Location: Worcester, Mass.

    Read more about WPI.

TIME Education

This Map Shows the Most Expensive College in Every State

Based on overall direct costs for the upcoming academic year

College costs can really add up, with charges for tuition, room, and board that seem to constantly rise.

However, the price tag for an education varies widely state by state. To chart this range, we recently found the most expensive college in each state, based on overall direct costs for the upcoming academic year.

Like last year, California’s Harvey Mudd College is the most expensive college in the US, with an overall price tag of $67,255 for 2015-2016. On the other end of the spectrum, the University of Wyoming — the most expensive college in that state — charges only $25,668 for an out-of-state student.

We found these numbers by examining the average cost of tuition, fees, and room and board that an incoming student would face over the 2015-2016 academic year.

Check out each of the most expensive colleges — and what they cost for this year — below:

Skye Gould/Business Insider

This article originally appeared on Business Insider.

More from Business Insider:

MONEY Student Loans

Man Who Threatened Student Loan Servicer Gets 3-Year Prison Sentence

153340763
Epoxydude—Getty Images

Michael M. Murray of Columbus, Ohio was sentenced to 37 months in prison on August 12th.

When you realize you can’t afford your student loan payments, there are a few things you should do. Mailing an envelope of white powder to your student loan servicer is not one of them.

Michael M. Murray of Columbus, Ohio, knows this because he was recently sentenced to three years in prison for doing just that. In 2008, Murray received a letter demanding he pay his delinquent loans, and in response, he ripped his name and address off the letter and put it in the return envelope with white powder and the name “Osama Bin Laden” on the return address line, according to a news release from the Department of Justice. Murray sent the letter — on which he reportedly scrawled a number of threats and obscenities — to a Department of Education federal student loan servicing center in Greenville, Texas.

Investigators found Murray’s DNA on the envelope, as well has his fingerprints. He was indicted in 2011 on one charge of making threats and hoaxes, convicted in April and sentenced on Aug. 12 to 37 months in prison. The news release did not provide details on the status of Murray’s loans.

Check out the new MONEY College Planner

There are smart ways to protect yourselves from bad student loan servicers or debt collectors — you do have rights! But committing a felony isn’t one of the tactics you should choose.

Should you find yourself behind on student loan payments, reach out to your student loan servicer (and despite your frustrations, try to do so in a civil manner). Ideally, you should contact the servicer before you actually miss payments, because the sooner you confront the problem, the more solutions will likely be available to you. You may be eligible for income-based repayment, or you might be able to temporarily pause your payments. If you have good credit, you may want to also explore refinancing options, to see if there’s a lower interest rate available to you.

In summary: You may think repaying your student loans is horrible and difficult, but there are a few ways you might be able to make it easier on yourself. As Murray could likely attest, threatening the Department of Education is not on that list.

Check out MONEY’s 2015-16 Best Colleges rankings

More From Credit.com:

 

MONEY Student Loans

Everything You Need to Know About Getting a Co-Signer for Your Loan

90864197
Francesca Cambi—Getty Images

Most students don't understand that co-signers are fully responsible for their loan debt as well.

Most people who borrow money to go to college take out federal student loans. One of the main reasons for that is because they’re very easy to get: Many federal student loan programs do not require the applicant to show financial need, and most don’t require a credit check. Even if you have no credit, which many high school graduates do not, you can probably get a federal student loan.

But that’s not always enough. There are limits to how much you can borrow from the government for each school year, and it’s rarely enough to cover the full cost of attendance. Without scholarships or savings, students may need to turn to private student loans. Because these students often have no credit history, they frequently need a co-signer in order to get the loan.

Getting a co-signer for a loan is a big deal — you’re asking someone to risk their credit standing and financial stability so you can borrow money — but unfortunately, many students don’t seem to grasp the gravity of that request.

Check out the new MONEY College Planner

Nearly half (47%) of undergraduate students surveyed by U.S. Bank said they thought co-signers would not be held accountable for paying off a student loan if the student can’t find a job. While many co-signers probably wish that were the case, that’s not how it works. No matter the circumstances, co-signers are rarely let off the hook for the loans they helped someone obtain.

While it’s crucial a potential co-signer understand the magnitude of their responsibility in this partnership, it’s just as important the primary borrower understand the liability, as well.

The U.S. Bank data comprises survey responses from 1,640 full- and part-time students ages 18 through 30, and the sample was weighted to be nationally representative. It’s possible the misconception about co-signer accountability in the event of borrower unemployment is skewed by responses from students who have no experience with co-signed student loans. Still, co-signing isn’t limited to education loans, so it’s a financial practice adults should understand.

Other statistics from the survey indicate much room for improvement in students’ knowledge of credit and personal finance basics. For example, more than half of students don’t check their credit scores, which is something all consumers should do regularly. Your credit standing can have a huge impact on various aspects of your life, including your ability to find somewhere to live, so it’s worth it to check your free annual credit reports from each of the three major credit bureaus and to take a little time each month to review your credit scores.

Check out MONEY’s 2015-16 Best Colleges rankings

More From Credit.com:

Your browser is out of date. Please update your browser at http://update.microsoft.com