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.
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.
Interested in refinancing student loans?Here are the top 8 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Figure.
Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.
4 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
5 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
6 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.
7 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 12/07/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
8 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 12/1/2019. Variable interest rates may increase after consummation.
|1.99% – 6.89%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|1.99% – 6.75%3||Undergrad & Graduate|
|1.99% – 6.65%4||Undergrad & Graduate|
|2.43% – 7.60%5||Undergrad & Graduate|
|1.85% – 6.13%6||Undergrad & Graduate|
|1.90% – 8.59%7||Undergrad & Graduate|
|2.74% – 6.25%8||Undergrad & Graduate|