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While the side-hustle is a popular way to make extra money, for many millennials it may be more of a necessity than a choice.
Taylor Rondestvedt, 25, said she would not have been able to afford all of her expenses without working on the weekends at a Swedish bakery in Manhattan and also teaching swimming lessons. The money from her former job as an editorial intern at a food magazine would not have covered her rent, phone bill, student loans, groceries and the occasional social event.
“I had to have at least one more job,” she said. Two meant she had more financial flexibility. After a year, she got a full-time position that paid more than her internship and was able to cut back on her side gigs.
More than half of recent graduates, those aged 24 to 28, said they are worried about having to work extra jobs and give up leisure activities to afford their student loan payments, according to a recent survey by Discover Student Loans.
The reality of making student loan payments doesn’t fully register with students until after the grace period ends. Only 26 percent of students in college or who had very recently graduated had the same worries about extra jobs.
“Students don’t quite anticipate repayment until it hits them,” said Nicole Straub, vice president of marketing and product management for Discover Student Loans.
Student loan debt has climbed over $1.5 trillion, a record high. The average debt per student for the graduating class of 2017 was $39,400, according to Student Loan Hero.
For most who borrowed, that amount of debt equals an average payment of $351 per month, Student Loan Hero said. That can be a pretty big chunk out of each monthly paycheck, especially for college graduates making the projected average $50,390 annually, according to a study by Korn Ferry, an organizational consulting firm, which looked ahead at what 2018 graduates could expect to make in May.
More than half of millennials have at least an occasional side-hustle, or second job, according to a recent survey by Bankrate. More millennials seek extra income from jobs other than their primary one than other age groups, the survey found. In fact, the likelihood of having a second job decreased with age.
Both parents and students are in agreement that a finding at least one job after graduating is a top priority, according to the Discover Student Loans survey.
“On many questions you see the answers for parents and students are not largely different,” Straub said. “We want alignment between those two parties.”
The top fear for parents is that their child will not be able to pay the monthly principal and interest payments on their student loans. Parents would also be willing to make sacrifices to erase their child’s debt, saying they’d give up social media, desserts, cell phones and their favorite shows if it would lessen the impact of loans.
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“Parents are first and foremost seeking the best possible outcomes for their children,” said Straub. “They’re the ones who can see what life after college is going to be like.”
The more communication that happens between parents and students before, during and after college about student loans, the better, she said. There are many strategic choices that families can make to keep the cost of education down and ensure that student loan repayment is not a financial burden on children or parents, said Straub.
“Think about sources of free funding: scholarships, grants, work study,” Straub said. “Take advantage of these things first.”
Parents and students can use an array of free online tools to calculate how much interest they will pay on student loans, what their average payment may be and how long they will be making payments.
Early planning for the financial impact of college can save students and families in the long run, especially as cost is a major constraint in selecting a school.
Students should also start planning for life post-grad while they are still in school. They can work while in school, plan a budget and even put money towards their student loan repayments early.
“As graduates prepare to go out on their own, they should take time to review their personal finances and prepare a monthly budget that will accommodate not only rent, food and having fun but a potential student loan payment,” said Straub.