Rideshare companies promise ultimate flexibility for drivers: Set your own schedule, earn more during busy times, get paid quickly. It seems ideal for college students looking to earn summer cash.
But driving for Uber, Lyft or other rideshare services requires more than simply downloading the app and filling up your gas tank.
Here’s what to know before signing up to be a driver this summer.
Rideshare driving may not be an option for undergraduate freshmen and sophomores due to age requirements.
- Uber: You must meet your city’s minimum driving age requirements and have at least one year of licensed driving experience in the U.S. Drivers younger than 23 must have three years of licensed driving experience.
- Lyft: You must be 21 or older. The exception: Drivers can be 18 years old in New York City.
If you’re too young for Uber or Lyft, other options include driving for a takeout or grocery delivery service. The age requirement for DoorDash and Instacart is 18. With Uber Eats, you must meet the minimum age to drive in your city and have at least one year of driving experience.
For both Uber and Lyft, drivers must have a valid U.S. driver’s license and provide proof of insurance with their name on the policy. Drivers should inform their insurer that they’re driving for a ridesharing service, or they could risk getting dropped.
But personal auto insurance likely won’t cover drivers when a rideshare app is open. Insurance companies want you to purchase commercial insurance if you’re using your car to make money.
To help solve this, Uber and Lyft insure drivers while they’re en route to pick up passengers and when passengers are in the car. However, coverage is limited when the app is on and drivers are waiting for a ride request. To cover yourself during those gaps, consider purchasing rideshare insurance.
Financial aid impact
Need-based financial aid is determined with tax information from two years prior. In other words, money earned in summer 2019 may reduce the amount of need-based aid a student receives for the 2021-22 school year. But if you expect to graduate within two years, this summer’s earnings won’t impact future financial aid.
Students can earn up to a certain amount before it counts against them for need-based financial aid. The income protection allowance for dependent students is $6,660 for the 2019-20 school year. The allowance is higher for independent students and parents.
If a summer job as a rideshare driver pushes your annual earnings above the income allowance, you could be eligible for less need-based financial aid in the future.
However, students working as independent contractors — as rideshare drivers do — have the “unique ability” to deduct certain expenses from their income and potentially keep their income under the allowance, says Billie Jo Weis, a client service manager at My College Planning Team, a financial aid advising firm in the Chicago area.
Rideshare companies don’t withhold taxes from drivers’ paychecks. Instead, you’re responsible for paying taxes on income earned through the app. You may be able to reduce your taxable income — therefore potentially increasing access to need-based financial aid — by deducting driving-related expenses including gas, tolls and repairs.
Keep track of your car- and driving-related expenses, including your mileage with the app on. The IRS allows drivers to deduct a set amount — 54.5 cents per mile in 2018 and 58 cents in 2019 — for every mile driven for business purposes. Uber and Lyft provide annual reports to each driver that include total mileage and earnings.
Between insurance, financial aid and tax considerations, being a rideshare driver may sound like more of a headache than it’s worth.
But you may have the opportunity to earn more than just cash.
For instance, Uber is piloting a program that offers free tuition for undergraduate degrees online through Arizona State University. It’s available to drivers in more than two dozen cities who have completed 3,000 rides and have gold, platinum or diamond status on Uber Pro, the company’s rewards system.
Emily Kuckelman, 28, of Denver is participating in the program by taking classes in graphic information technology online at ASU while driving 30 to 35 hours a week for Uber. The former teacher estimates that she earns $13,000 to $17,000 more annually than in her previous career. Plus, it’s flexible with her class schedule, she says.
“If I can afford to not drive, I don’t have to,” says Kuckelman, who works during peak hours to take advantage of Uber’s in-app promotions for drivers. “I want to make the most amount of money in the least amount of time.”
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The article What College Students Need to Know About Driving for Uber, Lyft originally appeared on NerdWallet.