When my student loans were in repayment, my salary from my full-time job wasn’t enough to cover my living essentials and my loan payments. To make ends meet, I took on different side gigs such as pet-sitting and house cleaning.
I wasn’t the only one in that situation. A 2017 survey from Bankrate found that 44 million people in the U.S. have some kind of side hustle. The earnings from these jobs can be lucrative; 25 percent of side gig workers earn over $500 a month.
However, lenders don’t always consider side hustle income when reviewing your loan application. If you’re looking to refinance your student loans to take advantage of perks like a lower interest rate or a different repayment term, not being able to list your side hustle earnings can be a huge problem. Thankfully, some lenders out there can help.
Student loan refinancing and side gigs
Refinancing my student loans seemed like a great solution. I could consolidate my debt and potentially get a lower interest rate. More of my payments could go toward the principal balance rather than interest, helping me save money and get out of debt sooner.
However, finding a lender was harder than I expected. One company after another turned me down because my salary was too low when compared to my high amount of student debt. While I made over $1,000 extra per month with my side gigs, most lenders wouldn’t consider that money as part of my overall income.
When you have a side hustle, you could bring in hundreds or even thousands on top of your salary — but it can only help you if the lender will accept your side gig as part of your household income.
As I discovered, few lenders will include side hustle earnings in your application review. These three lenders are among those that will.
CommonBond offers competitive interest rates and makes including side income easy.
When you complete the application, the company will ask you to enter your salary. However, unlike other lenders, they have an option for you to add other forms of income. You can add earnings from a second job like driving for Uber or waiting tables.
2. Laurel Road
According to Laurel Road, customers who refinance their loans through the company save $20,000, on average.
Additionally, the lender will let you pause your payments if you’re facing economic hardship. You can enter into forbearance for up to one year.
On Laurel Road’s application, it first asks you for your annual base income. But after entering the initial section, you can include additional income information such as bonuses and side hustle earnings.
LendKey is a unique option for refinancing. When you apply for a loan with LendKey, the lending platform searches its list of partners — which includes credit unions and other nonprofit organizations — to find you offers. That approach means you might find more flexible terms or repayment plans.
On the application, LendKey asks you to enter your total annual income, including all sources of funds. Include your side gig income here.
Completing the loan application
Once I found a lender that would consider my side income, I had to find a way to document it.
Most of my side gig clients paid me in cash. Although I tracked my earnings for tax time, I didn’t have a pay stub as proof. The absence of formal documents made the process a little more difficult, but I was able to overcome it by digging through bank statements.
If you want to include your side gig wages in your application, the lender will ask you for some proof of your earnings. These documents can help you show just how much you earn each month beyond your main salary.
- W-2: If you have a traditional second job, such as working in retail part time, your employer will send you a pay stub and a W-2 at tax time. By uploading them online with your application, the lender can see that your earnings are accurate.
- 1099: For those who do contract work or freelance on the side, your clients will send you a 1099 tax form if you did more than $600 of work for them. If you keep your 1099s together, you can use them to prove your annual income.
- Invoices: If your projects are typically under $600, you might not receive a 1099. Instead, you can show the lender copies of invoices you sent to clients to show your cash flow.
- App charts: If you have a side gig through a company like Uber, Shipt, or PostMates, the businesses usually provide a platform that shows your earnings by week, month, or year. Screenshots or statements of that data can be used in your application.
- Bank account statements: If you don’t have any of the above, you can also prove your income by providing several months of bank statements from your checking or savings account. The lender will consider all of the deposits in the account in its review.
By keeping good records, you can ensure the lender reviews all of your income when deciding whether to issue you a loan. In my case, my records proved my income. My lender approved me for a low-interest loan that helped me pay off my debt years ahead of schedule.
Choosing a refinancing lender
When it comes to student loans, launching a side gig can help you afford the payments and improve your financial situation. It can even make refinancing your loans possible, even if your full-time salary is too low for the lender’s eligibility requirements.
You can find side gigs that pay well and allow you to set your own schedule. By boosting your income, you can give yourself more security and breathing room in your budget.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Rates (APR)||Eligible Degrees|
|Get real rates from up to 4 Lenders at once
Check out the testimonials and our in-depth reviews!
|2.56% - 7.40%||Undergrad & Graduate||Visit SoFi|
|2.57% - 6.32%||Undergrad & Graduate||Visit Earnest|
|2.58% - 8.12%||Undergrad & Graduate||Visit Lendkey|
|2.80% - 7.02%||Undergrad & Graduate||Visit Laurel Road|
|2.54% - 6.65%||Undergrad & Graduate||Visit CommonBond|
|2.90% - 7.34%||Undergrad & Graduate||Visit Citizens|