One of the most popular suggestions for how recent graduates can pay off their student loan debt is to get a side job. Having a side hustle, in addition to a full-time job, can help grads increase their overall earnings and pay off their student loans faster.
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What if a student decides to get a side hustle while they are still in college, though? Depending on the student's financial situation, it may or may not be feasible to work a side gig. Here's what students need to know about how a side hustle impacts financial aid contributions before agreeing to work this kind of gig. Plus, check out the alternative to getting a side hustle and how students can juggle work with coursework and classes.
Consider Expected Family Contribution (EFC)
Many students rely on financial aid to cover college expenses, but financial aid packages do not always cover the total costs. This means many students are required to work as they attend school.
Charlie Javice - head of student solutions, Chase, and founder of Frank - said in situations like these students should keep family's Expected Family Contribution (EFC) in mind.
"If a maximum annual salary threshold is met while attending school, it could have an impact on the aid you are eligible to receive," said Javice. "The higher your EFC, the lower your aid offer will be from intended colleges."
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Student Status: Are You Dependent or Independent?
The amount a student could make from a side gig depends on whether the student's status is dependent or independent.
Dependent students, meaning those that used their parents' information when filing FAFSA, can make up to $6,600 a year before it affects their financial aid. Independent students, those who used their own information when filing FAFSA, can make $10,360 if they are single. If the student is married, they may make up to $16,620.
Are There Options That Allow You To Work in College?
There is another potentially tax-free option available to students - the work-study program.
"If students need more money to help cover school expenses, it could be a good idea to look into a work-study program," said Javice. "Any money made in one of these programs is not considered taxable income; it will actually be considered financial aid!"
Strategically Choosing a Side Hustle
Students who plan on working while enrolled in college, whether that means in an internship or side hustle, are advised to strategically choose a role that maximizes their experience and skill sets.
In a previous GOBankingRates' article on the best side hustles for college students, Scott Gibney, educational and career consultant at Gibney Solutions LLC, recommended hustles for students across a wide range of majors from communications to art and theater. Gibney said college students should take into consideration how this activity can play a positive role in getting a job post-graduation.
While there is always an opportunity to work as a rideshare or food delivery driver, students ultimately benefit the most from working in a role that focuses on their major and career goals.
Tips for Juggling Work and Classes
Working while going to college, regardless of what your course load looks like, is a big commitment. (It's even a commitment for post grads who work full-time and maintain side hustles!)
For students working while attending school, Javice said it's important to remember the two key success factors are organization and time management skills.
Even if you want to work as many hours as possible, do not overextend your bandwidth or you may experience burnout. Joe DePaulo, co-founder and CEO of College Ave Student Loans, recommends students aim to keep their work schedules to 12 hours or less each week. This ensures their studies remain the priority and they graduate on time.
"While many students must work in order to attain access to higher education, the importance of finding a schedule and balance that works for you is extremely important for physical and mental health," said Javice.
What Else To Know About Working Before Graduating?
Every student's situation is different, but deciding to work while attending college can bring many benefits to your current and future financial well-being. Javice recommends that students already working before they graduate set some of that money aside to help pay their student loans.
"Most loan providers don't start your repayment with interest until six months after graduation, therefore, any money you can pay in that six-month window will help pay down your principal balance faster and help accrue less interest overall," said Javice.
While side gigs are one source of income college students can use to help pay for expenses, they should not become a higher priority than getting an education.
"Make sure to not lose sight of why you are at college in the first place - to obtain a degree," said DePaulo.
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This article originally appeared on GOBankingRates.com: How a Side Gig Could Be the Key for College Kids To Pay Off Student Loans