As borrowers struggle to repay their student loans, many have secured an additional income by getting a second job.
For borrowers seeking Public Service Student Loan Forgiveness, the potential consequences of a side hustle are critical.
A second job can impact the pursuit of PSLF, but the good news is that borrowers are permitted to chase some extra income without losing eligibility.
PSLF Limitations on Second Jobs and Outside Work
Qualifying for PSLF is notoriously complicated. Fortunately, a second or third job won’t derail eligibility.
PSLF doesn’t require that a borrower only work in public service. Instead, the borrower simply needs to work full-time in a PSLF-eligible job.
Further, there is no earnings cap on PSLF work. A borrower making $250,000 per year could still qualify for PSLF. That said, there are still some consequences of the new income source.
Practical Consequences of a Side Hustle for Public Servants
Even though there isn’t an earning cap or one-job requirement, a second job will still impact PSLF.
The point of an extra job is more income. The more income a borrower generates, the higher their IDR payments will be. These higher monthly payments will mean less money is forgiven after 10 years of PSLF work.
At some point, a borrower could earn so much money that working toward PSLF no longer makes sense. The smaller your balance and the larger your income, the more likely you fall into this category.
Could my income be too large to qualify for an IDR plan? Some IDR plans, notably SAVE, do not have a cap on income.
Additionally, the 10-year standard repayment plan is also eligible for PSLF. A borrower could do eight years on SAVE and then switch to the standard repayment plan for the last two years of PSLF.
The Full-Time Employment Requirement
For borrowers considering additional work, it is essential to remember that there is a full-time employment requirement for PSLF.
According to the Department of Education, a borrower is a full-time PSLF employee if “you work an average of 30 hours or more per week during the period being certified on your PSLF form regardless of whether your employer considers you full-time for other purposes.”
If a second job will cause you to work less than 30 hours per week, it becomes a PSLF-eligibility issue. As long as you remain full-time, you won’t lose eligibility.
Sherpa Tip: There is a workaround to the full-time employment rule. If you work two part-time jobs at PSLF-eligible employers, you can qualify for PSLF if the combined hours add up to at least 30.
Tips for PSLF Borrowers with Two Jobs
As someone who worked in a PSLF-eligible job and worked a second job, I know it is stressful. You don’t want one mistake to erase all of your hard work.
With that in mind, there are two important tips I’d like to leave for everyone in this situation.
First, submit employer certification forms at least once a year. When you send in an employer certification form, your servicer will verify that you have met all PSLF requirements before certifying your progress. It is a great way to ensure that you are at the right job, on the right repayment plan, and have eligible loans.
Additionally, if you change PSLF employers, completing a certification years later can be a considerable challenge.
Second, don’t leave your PSLF job too early. We all know about the ten-year requirement to qualify for PSLF, but most borrowers must work a little extra. You need to be employed in a PSLF job at the time you apply for forgiveness and when the loans are discharged.
Don’t make the jump to your second job or the private sector until your student loans have been forgiven.
