Mastering Side Gigs for Student Loans

The weight of student loan debt can feel overwhelming, with the average borrower owing over $30,000 upon graduation. But what if there was a way to lighten that load faster than you thought possible? Enter the world of side hustles – a powerful tool in your student loan repayment arsenal. In this post, we'll explore how leveraging extra income can supercharge your debt payoff strategy, navigate the ins and outs of repayment plans, and balance the hustle without burning out.

Key takeaways

• Side hustles can significantly accelerate your student loan repayment journey
• Income-driven repayment plans may be affected by extra income, potentially increasing monthly payments but reducing overall interest
• The new SAVE plan offers benefits for undergraduate loans and freelancers, cutting payments to 5% of discretionary income

Understanding the side hustle effects on student loans

How does extra income affect income-driven repayment plans?

Income-driven repayment (IDR) plans are a lifeline for many borrowers, but adding side hustle income to the mix can change the calculation. Here's what you need to know:

• Higher monthly payments: As your income rises, so might your IDR payments.
• Reduced forgiveness potential: More income means paying off more of your balance, potentially lowering the amount forgiven at the end of your term.

But don't let this deter you! The new SAVE (Saving on a Valuable Education) plan offers some silver linings:

• Undergraduate loan payments cut from 10% to 5% of discretionary income
• Easier qualification for freelancers with simplified tax information access

Did you know? Some side hustles can actually count towards Public Service Loan Forgiveness if they're with qualifying employers!

TuitionHero Tip

Remember, you have to work at least 30 hours per week combined, and all your employers need to meet eligibility requirements.

Accelerating your repayment: The power of extra payments

How can you leverage "found money" to crush your student debt?

Think of your side hustle income as "found money" – cash that's separate from your primary earnings and budget. By applying this extra income directly to your loans rather than spending it, you can make significant strides in reducing your debt burden.

Let's say you owe $20k at 5% APR. Assuming you have a $500 monthly minimum payment, here’s how much money and time you could save with an extra payment.

As you can see, even small extra payments can lead to big savings over time!

Top side hustles for student loan warriors

Which gigs offer the best bang for your buck?

1. Freelancing: Writing, editing, graphic design, or programming can be lucrative and flexible.
2. Online tutoring: Share your expertise and earn up to $50/hour on digital tutoring platforms.
3. Virtual assistant: Help entrepreneurs with tasks like scheduling and booking flights, and earn $15-$30/hour.
4. Delivery services: Flexible hours with apps like DoorDash or Instacart.
5. Space rental: Got a spare room? Airbnb it for passive income.

Remember, the best side hustle is one you can sustain alongside your studies or full-time job.

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Navigating the tax maze of side hustle income

What do you need to know about taxes on your extra earnings?

Uncle Sam wants his cut, but don't let that scare you off. Here's a quick rundown:

• Report self-employment income of $400 or more
• Pay self-employment tax (currently 15.3%)
• Look for deductions related to your side hustle to reduce your tax liability

TuitionHero Tip

Set aside 20-35% of your side hustle income in a separate account for taxes to avoid surprises come tax season.

Dos and don’ts of side hustle management

It's easy to get caught up in the hustle, but remember – your well-being comes first. Here are some strategies to keep burnout at bay:

Remember, a sustainable side hustle is key to long-term success in your debt repayment journey.

Why trust TuitionHero

At TuitionHero, we're here to help lighten the burden of student debt. We offer guidance on private student loans, scholarships, refinancing options, and tips for managing financial aid. We also provide advice on using credit cards wisely to minimize interest costs.

Frequently asked questions (FAQ)

How can I determine which side hustle is best for my student loan repayment goals?

To choose the most effective side hustle, consider your skills, available time, and earning potential. Evaluate options like freelancing, tutoring, or gig economy jobs based on their flexibility and income potential.

Calculate how much extra you need to earn to make a meaningful impact on your loans, and select a side hustle that aligns with your financial goals and personal interests. Remember to factor in the time commitment and ensure it won't negatively affect your studies or primary job performance.

Will my eligibility for student loan forgiveness programs be affected if I earn extra income from side hustles?

Extra income from side hustles generally doesn't affect your eligibility for forgiveness programs like Public Service Loan Forgiveness (PSLF). However, it may affect your monthly payments under income-driven repayment plans, potentially reducing the amount forgiven at the end of your repayment term. It's important to weigh the benefits of faster repayment against potential forgiveness amounts.

How should I report my side hustle income when applying for or re-certifying my income-driven repayment plan?

When applying for or re-certifying an income-driven repayment plan, you'll need to report all sources of income, including side hustles. Use your most recent tax return if it accurately reflects your current income.

If your income has changed significantly, you may need to provide alternative documentation, like pay stubs or a written statement explaining your income. Be honest and thorough in your reporting to avoid any issues with your loan servicer. Remember, the new SAVE plan offers easier access to tax information for freelancers, which can simplify this process.

Are there any tax deductions available for student loan borrowers who use side hustle income for repayment?

While there's no specific tax deduction for using side hustle income to repay student loans, you may be eligible for the student loan interest deduction on your taxes. This allows you to deduct up to $2,500 of interest paid on qualified student loans, regardless of whether the payments came from your primary job or side hustle income.

Additionally, you may be able to deduct certain expenses related to your side hustle as business expenses, potentially lowering your overall tax liability. Consult with a tax professional to understand all available deductions and ensure you're maximizing your tax benefits.

Final thoughts

Harnessing the power of side hustles can be a game-changer in your student loan repayment strategy. By understanding how extra income affects your repayment plans, strategically applying earnings to your loans, and maintaining a healthy work-life balance, you can accelerate your path to financial freedom.

Ready to kick your student loan repayment into high gear? Start exploring side hustle opportunities today, and remember – every extra dollar you earn is a step closer to a debt-free future.

Source

• Student Loan Repayment & the Power of Side Hustles
• Earn Supplementary Income with a Side Hustle | Discover Student Loans
• How to Start a Side Hustle for Extra Cash to Pay for College | Edvisors
• Filing Taxes From Your Side Hustle | Education Loan Finance
• How the SAVE Student Loan Repayment Plan Can Lower Your Freelance Tax Bill
• How a Side-Hustle or Second Job Impacts Public Service Loan Forgiveness (PSLF)
• Loan savings calculator | Nerdwallet