How to Become a Freelancer and Still Manage Your Student Loans

how to become a freelancer

Freelancing is a great way to pay down student loan debt. What’s not so clear is how to turn freelancing into a career without breaking the bank or missing your student loans payments. Learn how to become a freelancer the right way—patiently, diligently, and well-informed.

1) Start out freelancing on the side

In a perfect world, you could quit your regular job today, start freelancing tomorrow, and have enough work to pay your bills by the end of the month. In the real world, that’s a good way to not only default on your student loans, but to invite financial hardship into your life.

Without a doubt, you need a plan to transition. If you want a full-time freelance career, you can quit your day job when:

  • You’ve saved 3 to 6 months of living expenses
  • You’ve built up some clientele
  • You have more freelance work than you can handle on the side

It’s never easy working full-time and on the side, but people do it every day successfully, and you can, too.

2) Make sure you’re charging enough

While you may not be able to charge much when you’re first starting out, you should be able to ask for more once you’ve been freelancing for a while. When setting your price—now and in the future—consider:

  • Your expenses (including how much extra you want to earn to put toward student loans)
  • Target annual salary
  • Your years of experience in your field
  • Whether you’ll be charging by the hour or by the project
  • What other freelancers in your field are charging

To learn how to find freelance work, check out our picks for top freelance job sites. They’re great places to look for work, obviously, but also to get a feel for how much you can and should be charging.

3) Use free tools to save time and money

If you’re not careful, the administrative side of freelancing can eat into your time and profits. That’s why it’s a good idea to utilize as many free tools as possible.

For instance, check out Harvest for project management, time tracking, expense tracking, and invoicing. The free version is perfect to start, allowing for one user, four clients, and two projects at a time. As your business grows, you can upgrade to unlimited clients and projects for $12 a month. Trello and Asana are other good go-to’s for project management, so research the features that each offers and see what works best for you.

And please don’t pay an expensive lawyer to draw up client contracts. You can do that yourself with Shake, an app that allows you to create, sign, and send agreements to your clients. There’s a limited free version, but as you get bigger, you can upgrade to the Pro plan for $10 a month.

4) Stay on top of your taxes

As you learn how to find freelance work and improve your work processes, hopefully the jobs will start pouring in. But as you begin to make more money, tax documentation becomes all the more important. Of all the things you need to know about how to start a freelance business, this is the part where you probably have the most to learn.

Keeping track of your income

Instead of the W-2s provided by an employer, freelancers receive 1099s for their work. However, your clients are only required to file a 1099 if they paid you $600 or more over the course of the year. That’s why it is so important that you keep track of your income. You may not receive a 1099 for the work, but you are still responsible for claiming the income and paying taxes on it. If you do not receive a 1099 from a client who paid you more than $600 over the course of the year, ask them for it.


Don’t waste money on things you can deduct. The most obvious ones are for office supplies and equipment, but don’t overlook qualifying travel, entertainment, and education. When you travel for business, entertain clients, and pay for work-related education (online or off), it’s generally tax-deductible.

Don’t forget about your home office deduction. This can be a big help, as it allows you to deduct a percentage of your mortgage or rent, and utilities. There’s just one catch: The room you use for work must only be used for work. It cannot double as anything else at any point in the day (e.g. the living room, the kitchen, the bedroom). Certainly, you can convert a room into a full-time workspace, but be sure it’s not used for anything else from that point forward.

And, as always, take the student loan interest deduction, which may be as much as $2,500.

Self-employment tax

If your net earnings from freelancing are more than $400 for the year, you are responsible for paying self-employment tax, which pays for Social Security and Medicare. Freelancers, beware: This tax can be steep. Though wage earners have taxes for Social Security and Medicare withheld from their paychecks, employers are obligated to contribute as well. When you’re self-employed, you’re responsible for it all.

Estimated tax payments

When you work as a wage earner, your employer withholds taxes for you. That’s not the case when you’re freelancing. Instead, it’s your responsibility to send in estimated tax payments every quarter. Fail to do this and you’ll likely find yourself owing more taxes at the end of the year than you can cover. If that happens, you’ll find yourself not only dealing with student loan debt, but back taxes, too.

For federal taxes, refer to Form 1040-ES. You’ll find a worksheet for figuring your estimated tax payments, due dates, and forms and addresses for mailing them in. You can also pay your estimated tax payments online through IRS Direct Pay.

Don’t forget your state taxes. Check on rules specific to your state’s estimated tax payment requirements.

5) Line up healthcare

If you do go full-time freelance, you won’t be covered under an employer’s health insurance plan anymore. Check the marketplace to explore your options.

6) Minimum payments are fine for a while

Just because you start freelancing to pay more on your student loans doesn’t mean you have to do so immediately. If you really do want a full-time freelance career—and your end-goal is quitting your regular job—consider making your minimum student loan payments while socking money away for the savings cushion you’ll need once you let your regular job go.

7) In case of emergency, consider income-driven repayment plans

Ideally, you want to stay on the standard 10-year student loan repayment plan. But let’s say you quit your regular job because your freelance work is so lucrative. Things seem fine for a while, but then take a nosedive. It may be time to throw your hat back into the full-time employment ring, or maybe it’s just growing pains of your freelance business. Either way, it may be time to consider the income-driven repayment plans available for federal student loans.

Just keep in mind that, while your monthly payment amounts may be reduced, the length of your loan will increase. Still, paying more interest in the long run is preferable to defaulting on your student loan. Just remember to start sending in larger payments once your finances get back on track.

Learning how to become a freelancer and how to start a freelance business is hard work. The key is keeping your eye on the prize, namely the financial freedom you’ll find after paying off your student loan debts.

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