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Earlier this year, Andres Portela graduated from the University of Arizona with a bachelor’s degree in political science — and about $10,000 of student loan debt.
Portela doesn’t have to start chipping away at his student loan debt until November, when his lender’s grace period ends. In addition, he says he’s earning “decent money” as a PR manager at an advertising firm in Tucson, Arizona.
However, he wants to sock away some extra cash to put toward his student loan debt.
To do so, he’s supplementing his income by driving about six hours a week for Lyft, one of the country’s largest ride-hailing services.
“Without Lyft, I would be cutting into the money I’m saving for a house,” Portela says. “I got married two months ago, so I am juggling paying back loans and paying for my life.”
What are Lyft and Uber drivers using the money for?
Like Portela, many other car owners are getting behind the wheel for Lyft and its chief ride-hailing rival, Uber, to get a handle on their debt.
According to Uber-commissioned research performed by Benenson Strategy Group in 2014, 19 percent of surveyed Uber drivers spent their earnings on student loan debt. For Uber drivers under age 30, it was 28 percent.
Meanwhile, nearly half of Uber drivers earmarked at least some of their earnings for car payments, and 31 percent spent some of their Uber income on house payments, the Benenson research shows.
Christian Perea, who lives in the San Francisco Bay Area, has driven for Lyft and Uber since mid-2014 — first on a full-time basis, and now on a part-time basis — and says he’s managed to erase a considerable chunk of debt as a result: $4,000 worth of credit card debt, a $1,400 repair loan and a $4,000 car loan.
“I want to eventually get to my student loans, but to be honest, they’re very low-interest in comparison [to my other debts], so any extra cash would go to them last,” says Perea, whose primary salary comes from his job as head of operations at The Rideshare Guy, a blog and podcast geared toward ride-hailing drivers.
Harry Campbell, founder and CEO of The Rideshare Guy
Harry Campbell, founder and CEO of The Rideshare Guy, says that many of the readers of his blog and listeners of his podcast are recent college graduates who are seeking extra money to pay off student loans and other people who are trying to tackle credit card debt.
“Rideshare driving is great because you don’t have to work every week or even every month,” Campbell says. “Whenever you feel like going out and making some money and paying off some of your debt, you can do just that.”Check your free scores now
How much do Lyft and Uber drivers make?
Just how much money can a Lyft or Uber driver expect to rake in? Unfortunately, there’s no simple answer to this question.
On its website, Lyft says a driver can make up to $35 an hour. At Uber, a driver makes an average of $19 an hour, according to the Benenson research.
However, a recent BuzzFeed News review of data supplied by Uber found that in late 2014, the average Uber driver in three major markets — Denver, Detroit and Houston — earned less than $13.25 an hour after expenses such as gas and depreciation of the vehicle.
“A lot of part-time drivers are able to earn around $15 to $20 an hour [before expenses] by focusing on the times and places that are most profitable to drive,” Campbell says, pointing out that a Lyft or Uber driver’s income can vary widely depending on where and when the driver works.
Uber’s own numbers illustrate the geographic differences in drivers’ earnings. Data cited by Money magazine show that an average Uber driver in New York City earned $30.35 an hour before expenses in October 2014, compared with $16.20 an hour in Chicago and $16.98 an hour in Los Angeles.
As for the “when” part of the equation, a driver’s per-hour pay can spike on Friday and Saturday nights, when Lyft and Uber typically institute higher “surge pricing” rates to reflect increased demand for rides, according to Campbell.
Is driving for Lyft or Uber worth it to pay down debt?
Wherever or whenever a Lyft or Uber driver works, Campbell stresses that the driver can’t count on pocketing every penny of his or her earnings. He notes that a driver must cover the cost of gas, take into account vehicle wear and tear, and pay income taxes.
A driver may also need to pay additional auto insurance costs if his current policy doesn’t cover driving commercially.
Also, if you don’t already have a car, it may not be worth buying one just to drive for Uber and Lyft as you’ll likely add more debt to your load: A car payment and insurance and registration costs.
“There’s a lot of independence with driving [for ride-hailing services], which is great since you really have the freedom to set your own schedule, but you also need to think like a business owner,” Campbell says.