Kate Ottavio has not one, but two great posts on the topic at PR Breakfast Club: Give it away… For Free! and Bring on the money! Working for free… (both excellent reads).
She makes an excellent point that “one will be asking us for our advice when we‘re out of a job or have closed shop.” Which is true.
I think there comes a time in every professional’s life where they want to make money and when your time becomes even more valuable.
If you aren’t comfortable quoting your friend your hourly rate, see if there is something you can barter for. Maybe your friend is an excellent web page designer and you are a great copy editor. Offer to edit his next term paper in exchange for helping you with your website. There is always something.
I know I’ve said it before, but don’t sell yourself short either. Make your projects worth your time and don’t be afraid to say no when the project isn’t worth your time. Obviously, try to leave the door open in case that changes, but don’t just accept a project to accept it or because you think there isn’t anything better out there. There will be.