Impulse Spending Fixes and PSLF Choices When You’re in Grad School

Summary

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NerdWallet’s Smart Money Podcast

Episode: Impulse Spending Fixes and PSLF Choices When You’re in Grad School
Release Date: February 2, 2026
Hosts: Sean Pyles, CFP®, Elizabeth Ayola
Guest Nerds: Amanda Barroso, Kate Wood

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Episode Overview

This episode is a two-parter that dives deep into:

• How to “reset” money habits by giving yourself a “hard reboot” (No-Spend and Money Mix-Up Challenges), and
• Listener question: Should you keep making student loan payments while in grad school (with Public Service Loan Forgiveness, PSLF, in mind) or direct that money toward a new home?

Through research-backed guidance and candid conversation, the Nerds break down sustainable financial strategies post-holiday splurging, examine the psychological roots of impulse spending, and demystify the latest (and often convoluted) PSLF rules, especially with recent legislative changes.

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Segment 1: Resetting Money Habits in the New Year – No-Spend and Money Mix-Up Challenges

Timestamps: 02:48–22:41

The Problem: Post-Holiday Spending Hangover

• Sean: "Sometimes your money habits just need a hard reboot." (02:48)
• The start of the year is when many realize they've spent too much and want to cut back (03:00, 03:22).

The Approach: No-Spend & Low-Spend Challenges

• Amanda Barroso (guest): Has done “low-spend challenges” and tried thrifting Christmas gifts. Finds financial challenges helpful for directing limited resources purposefully (04:07–04:49).
• Elizabeth: Doesn’t do formal challenges but naturally reins in spending when needed. Realizes impulse/binge spending can undermine these efforts (03:50, 06:15).
• Sean: While “no-spend” can help reset habits, it can also promote “binge and purge” cycles and miss addressing deeper issues, like money trauma (05:25, 06:15).

Notable Quote – On Deeper Money Issues:

• Elizabeth: “If you fundamentally have an issue with your spending and it’s rooted to … money trauma … just saying I’m going to stop Uber Eats altogether doesn’t necessarily address maybe that trauma.” (06:15–06:54)

How to Make No-Spend Challenges More Effective

• Get clear on your goal: “Is it to break a bad spending habit, or build maybe a good spending habit, maybe jumpstart a specific goal?” – Sean (06:57)
• Tie savings to meaningful, concrete targets (e.g., emergency fund), rather than letting it just sit. – Amanda (07:20–08:14)
• Focus on a single priority to avoid overwhelming yourself: “Maybe even just one … focus goal for your no-spend challenge can make it helpful to actually stick with it.” – Elizabeth (08:14)

The Nerds’ Personal Spending Challenges

Elizabeth’s Challenge:

• Saying no to expensive group vacations and building “sinking funds” for recurring anticipated expenses (birthday splurges). (09:08–10:43)
• Learning to pre-plan for “treat yo’ self” moments, e.g., birthdays, with a dedicated fund. "Instead of being like, oh, surprise, I don’t know how much I’m spending … having a fund for it will help me avoid this January/February pull-back." (10:43)

Amanda’s Challenge:

• Using a “brick” device to create friction and block distracting/shopping apps, tracking if this reduces impulse spending—especially during high-stress, after-work hours (11:37–13:22).
• Turning time away from the phone into more fulfilling activities with her daughter (journaling, scrapbooking), and using savings for: a Disney trip, emergency fund, and home maintenance (13:52–14:36).
• Elizabeth adds: Using her own brick reduced online shopping, specifically impulse-browsing Zara (16:20–17:14).

Notable Quote – On Technology and Money:

• Sean: “We use scrolling and spending as a way to self-soothe a lot of the time.” (17:18)

Sean’s Challenge:

• “Friction maxing” (inspired by a 2026 Cut article): Making spending less convenient by setting one new friction point each week—no online purchases, cash-only, no phone purchases, no takeout apps—hoping to “enjoy what it means to be a person learning and growing and sometimes struggling.” (17:38–19:49)
• Expecting to learn from real-world friction—human interactions and missed conveniences. “Let’s build some community and use our cash more.” (21:56)

Challenges of Using Cash & Avoiding Online Spending:

• Discussion about practicalities of cash-only living: “...there are some shops...that say we do not accept cash at all...” (20:55)
• Elizabeth: Excited for the increased human connection that comes with in-person transactions (21:27).

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Segment 2: Listener Money Question – PSLF vs. New Home: Which to Prioritize?

Timestamps: 25:23–50:22

Listener’s Dilemma (Sydney):

• 34-year-old nurse, married, no children. $30,000 federal student loans ($500/month, 3 years left for PSLF), starting master’s degree. Husband: $50,000 in loans, excellent credit. Monthly car payment $600. Emergency fund (just under 3 months) in high-yield savings. Wanting to buy a new home closer to work.

Understanding PSLF in 2026 (Kate Wood, Lending Nerd)

• PSLF forgives the remainder of Direct Loans after 120 qualified monthly payments (10 years) in public service employment (26:39).
• Payments must be made while working for a qualifying employer; deferment periods do not count toward PSLF, even if voluntary payments are made. Declining deferment and continuing to work 30+ hours/week can keep payments qualifying (27:54).
• New grad loans taken after July 1, 2026 face stricter repayment plan options, may run on a separate 10-year PSLF timeline (28:43).

Notable Quote – On Rule Complexity:

• Kate: “If she takes out new loans for a new graduate program, that’s a whole, whole other thing. Those could … qualify for PSLF, but those new loans would be on a separate timeline from her existing loans.” (27:54–28:43)

New Repayment Landscape:

• For new grad loans after July 2026: Only two repayment plans (new standard and "Repayment Assistance Plan," a new IDR; no PAYE, ICR, or IBR).
• Borrowers in current programs get a “grace period” to stick with older plans up to three years or until program finish, whichever comes first (28:52).
• New loans bump all existing loans into the new plans (complexity alert!).

PSLF vs. Income-Driven Repayment Forgiveness

• PSLF = 10 years (not taxed).
• IDR Forgiveness = 20–30 years (subject to tax in some cases) (31:21–31:25).

On Student Loan “Tax Bomb” (IDR, not PSLF):

• “PSLF forgiveness is not going to be affected by that because PSLF is never taxed at the federal level.” (31:30)

Recent Changes & Surprises:

• Graduate Loan Caps:
  Professions not classified as “professional” (e.g., nursing) have significantly lower annual/total loan limits ($20,500/year, $100,000/lifetime), risking underfunding of degrees with high tuition (32:51–35:23).
• Controversy: Could push more students to private (pricier, less-protected) loans or out of high-cost professions altogether—posing risks to the healthcare workforce and diversity. (35:37–36:55)
• International Comparison:
  Elizabeth’s UK undergrad/grad costs were ~£10,000 and £5,000–£6,000 respectively—a stark contrast with US education costs. (37:15)

Risks to PSLF’s Existence

• Recent Trump administration changes: Employers found to have engaged in “illegal activities” (wide definition) could lose PSLF eligibility—creating anxiety among borrowers (38:13–39:19).
• Two major lawsuits challenging this, including from cities/unions. “Nothing is happening yet … at minimum, these could hold up implementations … for months or potentially years.” (41:05)

Notable Quote – On Anxiety and Long-term Perspective:

• Kate: “If PSLF forgiveness is your goal and you’re working toward it, keep working at your job, or again, any job with a qualifying organization … It doesn’t make sense to jump to conclusions based on this ‘it could happen’ worry.” (41:05–41:18)

• PSLF can’t be ended by executive order—requires Congressional action. The program is bipartisan and hard to argue against. (41:20)

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Should Sydney Prioritize Student Loan Payments or Saving for a Home?

The Big Question:
Keep making PSLF-qualifying payments, or pause payments in grad school and redirect $500/month to a new home/emergency fund/etc.?

Factors to Consider:

• Level of emergency savings (Sydney’s 3-month cushion may be thin given major transitions)
• Retirement savings status (unknown for Sydney)
• Car and mortgage obligations create significant fixed-cost pressure (43:50)

Panel Opinions:

• Elizabeth: “I personally would pay off the PSLF loans. That would be my choice in this scenario ... would it be amazing for all my loans to be paid off after a period of time ... and I could use all of that bulk cash ... to do other things that are really fun.” (43:50–44:17)
• Kate: Would also stick with paying off loans, BUT emphasizes PSLF is highly likely to stay. Recommends:
  • Review paperwork to confirm payment count.
  • Find every way to minimize monthly payments (through old income-driven plans if possible), to have as much debt forgiven as possible. (44:21–45:55)
  • If taking out new grad loans, everything changes (new repayment plan, new PSLF clock).
• Sean: Emphasizes this is a matter of values/personal goals—ask where extra cash would have the most impact (emergency fund, retirement, emotional relief from less debt, etc.) (42:36)

Notable Quote – Be Your Own Advocate:

• Sean: “It seems like this is yet another situation where people have to be their best, most informed advocate.” (49:48)

The Forgiveness Process:

• Should be automatic, but slow in practice, and issues with servicers are common; being proactive and record-keeping is critical (46:32–49:46).
• Some borrowers have qualified but haven’t seen balances wiped clean yet; keep pushing your loan servicer and document everything.

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Memorable Quotes & Human Moments

• Elizabeth: “Do you know, I don’t know if you guys know a worse feeling than coming back from vacation and looking at your bills and feeling broke. That’s not fun.” (09:44)
• Amanda: "Part of the human experience is not just being able to glide so seamlessly through life, right? Even if it’s a little thing like... a little bit of friction probably will do us all good, make us a little bit stronger." (21:59)
• Kate: “Nothing is happening yet ... at minimum, these [lawsuits] could hold up implementations of these changes for months or potentially even years.” (41:05)
• Sean: “We are iPad kids without even realizing it.” (18:23)

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Key Takeaways

• No-Spend Challenges Can Work—If You Personalize Them:
  Build in reflection, sustainable habit change, and connect savings to concrete goals—rather than just temporary deprivation.
• Creating Friction Helps Reduce Impulse Spending:
  Structures (like “bricks” to block apps) and analog tools (cash) can curb both tech and financial autopilot.
• PSLF: Stay the Course, Track Your Progress:
  The program is complex but still robust; most risks are political and slow-moving. Make qualifying payments if you can, minimize your outlay with eligible plans, document everything, and keep an eye on political/legal changes.
• Big Financial Choices Are Personal—Consider Your Values:
  Whether to funnel extra cash into debt, a home, or savings depends on your sense of urgency, comfort, and future goals. Be honest about what outcome brings you peace.

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For Listeners:

If you’re doing a no-spend or money-mix-up challenge, let the Nerds know! Leave a voicemail at 901-730-6373, email [e-mail], or comment on Spotify/Apple. Questions, anxieties, or Nerdy victories—all are welcome.

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Transcript

[Sean Pyles]

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[Sean Pyles]

Sometimes your money habits just need a hard reboot.

[Elizabeth Ayola]

Yeah, you know what, Sean? I find that that reboot tends to happen towards the beginning of the year, after the holidays. After I've just done too much.

[Sean Pyles]

As in like right now?

[Elizabeth Ayola]

Yes, right now.

[Sean Pyles]

Let's do it. Welcome to NerdWallet's Smart Money podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Pyles.

[Elizabeth Ayola]

And I'm Elizabeth Ayola. On this episode, we're going to answer a listener's question about whether to keep making student loan payments while in grad school or. Or put that cash towards a new house.

[Sean Pyles]

But first, Elizabeth and I are gonna mix things up with our money habits. At least February is a popular month for no spend challenges, where you either don't spend on non essentials or maybe just choose a specific category to not spend money on. And this year we're taking that idea, but we're taking it in a slightly different direction. And friend of the pod personal finance nerd Amanda Barroso is here for the conversation. Hey, Amanda.

[Amanda Barroso]

Hi there.

[Sean Pyles]

So, Amanda, Elizabeth, are you guys big no spend people? What's your thoughts here?

[Elizabeth Ayola]

I think I am, in a way, subconsciously, so I don't do it as a challenge. Like, I know there's lots of challenges on social media, but I think I know when I'm spending too much and I go, hey, girl, we got to cut back the spending. So.

[Sean Pyles]

But it's maybe not structured around a single month like we're talking about.

[Elizabeth Ayola]

No, no, no. It's just whenever I need to cut my spending down.

[Sean Pyles]

Amanda, I know you do have some experience with it.

[Amanda Barroso]

Yeah, I mean, this is a recent thing for me. I've been on the podcast a few times talking about my low spend challenges last year. And then I also tried thrifting my kids Christmas gifts for Christmas last year, but no spin challenges are a fairly new thing for me. I think the thing is, maybe it's after having a second kid owning a home, our budget just feels so tight and it's like while I can control some of the things that are spreading our money thin, I can't control some of the things that are spreading our money thin. So I can't control grocery prices, I can't control insurance premiums, I can't control the dang property taxes that are driving up my mortgage every year.

[Kate Wood]

But oh my God, Woosa.

[Amanda Barroso]

There are some things that I can control, choices that I can be more conscious about making, like my spending. So that's why I think these financial challenges are helpful, because you can kind of set the rules, you can tailor them to the goals of you or your family, you can make them as long or short as you want. And on my corner of the Internet, which I'm sure is highly curated, but it does seem like a lot of folks are thinking about their consumption again, beginning of the year stuff. But you know, I think there's a real sort of momentum going about people trying to make changes that reflect their values and their goals.

[Sean Pyles]

Yeah, I've been seeing a lot of people say that they're generally striking how much money they're going to be spending on non essentials and I think that's a smart idea. I like a no spend challenge, but I do think their utility can be limited. You know, I like that they can help you reset your spending and help you reevaluate your relationship with how you are disposing of your money and maybe non essential ways, but it can also lead to this binge and purge pattern where maybe before you start this no spend challenge, you actually buy a bunch of stuff that you didn't need or that you thought you might want in the coming month and then you have this month of abstinence where you're not spending money on things and then afterwards you feel like you've done such a great job so you end up buying a bunch of stuff that you didn't need and it ends up actually not really helping you at all. I think it can actually make you worse off after all of that. My issue is that some of these changes aren't sustainable as you're talking, Sean.

[Elizabeth Ayola]

I'm thinking around money values and even maybe like money trauma that you have and how a no spend challenge can be counterproductive to helping those things. You know, so if you, if you fundamentally have an issue with your spending and it's rooted to, I don't know, maybe you didn't have enough things when you were growing up. I was talking to someone the other day and she was like part of her trauma around Buying or eating out is that when she was younger, they didn't have enough money to get all the foods that she wanted to eat. So now that she's an adult, she just wants to buy any food she wants and she wants to eat it when she wants to eat it. But anyway, so my point is, like doing a no spend challenge and saying I'm going to stop Uber eats altogether doesn't necessarily address maybe that trauma that you're dealing with. Right.

[Sean Pyles]

So, yeah.

[Elizabeth Ayola]

So how can people get more from one of these month long challenges?

[Sean Pyles]

Well, for me, I think it helps to know what you want from a challenge that you're setting up for yourself. Is it to break a bad spending habit or build maybe a good spending habit, maybe jumpstart a specific goal? Also, again, know the limitations. If you want this to be a long term change, this could be a month to set the groundwork for that. But set yourself up with a plan to continue this beyond the span of February.

[Amanda Barroso]

For me at least, it's super important to know, like, what I want to get out of this. You know, you might just want to see if you can do it. Sort of like a test of willpower. And I think there is a little bit of that for me. But if your short term challenge is tied to a longer term goal, you should get clear on that ahead of time. Like, have a plan for how to transition from the challenge piece, like back to real life, how to make this sustainable. I also think it's important to figure out what you want to do with the money that you're saving during the challenge, because that can be really motivating. So don't just let it sit in your savings, collecting like a penny of interest per month in those pitiful checking accounts. Like, let it be tied to some goal toward building financial stability, toward an emergency fund, something that was maybe giving you anxiety in the previous year. How can this money serve you and kind of help erase some of those things?

[Elizabeth Ayola]

Yeah, I agree with that. I think last year what helped me, because around this time, again, my birthday's in December. Yes, I'm going to keep telling y' all that. And I tend to oversee.

[Sean Pyles]

Wait, Elizabeth, is your birthday in December?

[Amanda Barroso]

No.

[Elizabeth Ayola]

You're trying to be funny, I see. But yes, I tend to treat myself too much in December and in January and February, I'm paying off, treating myself. So I remember last year, my main motivator was just to clear my credit cards. Right. And I was able to do that within two months. So I didn't have any balances But I think for me, just having maybe even just one instead of like five goals simultaneously, one focus goal for your no spend challenge can make it helpful to actually stick with it.

[Sean Pyles]

Yeah, that's super smart because there can be this impulse too, to do everything all at once. And that is in a way, setting yourself up to fail too. Elizabeth, Amanda, we're all doing our own versions of these month long challenges here. Elizabeth, let's start with yours. What are you going to be doing and why?

[Elizabeth Ayola]

It's pretty boring, but just no major expenses. I don't know what it is around the beginning of the year, as I'm saying it out loud, maybe I do. I think we get back from the holidays and everyone goes back to work and we're like, no, we want to go back on vacation. So then everyone starts planning all these vacations. So what I'm saying is I get invited to a lot of vacation type of things, you know, resorts, blah, blah, blah, at the beginning of the year from friends and things like that. So I've had to say no to a couple and that happened to me last year as well because I find the bulk spending kind of just throws my budget.

[Sean Pyles]

You know, it can be hard to say no to those things.

[Elizabeth Ayola]

It is hard.

[Sean Pyles]

What's your mindset when you're saying no? How do you choose which one to say yes to?

[Elizabeth Ayola]

Do you know, I don't know if you guys know a worse feeling than coming back from vacation and looking at your bills and feeling broke. That's not fun. So, yeah, you know, a vacation can be enjoyable. Yes, you're living in the moment, spending all that money, but you come back and then your account balances are looking crazy. I don't like that.

[Sean Pyles]

So I think that's your motivation.

[Elizabeth Ayola]

That's my motivation. And also just to remember my long term goals for the year. I still want to max out my 401k. I still want to have enough in my emergency savings and I want to set myself up for success. So that helps me to just be like, no.

[Sean Pyles]

Are you planning on turning this month into like a longer term habit or is it still kind of correcting some overspending from your birthday?

[Elizabeth Ayola]

Oh, that is such a actually. Hmm. So let me tell y' all something I've done because I was like, girl, enough is enough. And remember I said earlier on the pod that I was going to start doing more sinking funds. Sean, I know you're happy about that, opening more accounts. I love a sinking fund.

[Amanda Barroso]

I have like nine right now in my.

[Sean Pyles]

You And I never.

[Elizabeth Ayola]

Yeah, yeah, I never. I was like, that's too much management. But hey, girl, maybe you need a bit more management.

[Sean Pyles]

Direct deposit. Easy peasy.

[Elizabeth Ayola]

Exactly. So I'm like, I'm actually gonna save towards my birthday this year versus being like, oh, surprise. I don't know how much I'm spending. So it's. I know I'm 37 now and I know that I like to spend on my birthday. That's enough years to know that. So, you know, having a fund for it will help me kind of avoid this January. Oh, no. I have to pull back my spending.

[Sean Pyles]

Yeah.

[Amanda Barroso]

Listen, how good will you feel January 2027, knowing that you cash flowed your birthday, that you.

[Elizabeth Ayola]

Absolutely.

[Amanda Barroso]

December, you open up that sinking fund and you have X amount of dollars and, you know, you treat yourself. Exactly. I think that that's wonderful.

[Sean Pyles]

I would love to see that challenge for you, Elizabeth. Maybe this coming December. Just don't spend any more than you have already allocated as you've been saving up over the course of this year.

[Elizabeth Ayola]

I love that. I love that. So y' all gonna have to check in with me. Hold me accountable.

[Sean Pyles]

We will hold you accountable. You know I will. So, Amanda, what about you? How are you gonna mix things up this month?

[Amanda Barroso]

Okay, so I got a brick for Christmas and I've been to build a house. Okay. Okay. For those of you who don't know, a brick is like this little small, like, physical device that helps you block the apps on your phone by adding a little friction to how you access apps on your phone. So it's like a little. It has a magnet. So I have it, like up on my fridge. And you tap your phone to the brick and it locks certain apps and it's like fully customizable. You can set up different times, like a workday time, family time, weekend time, whatever that is. And the only way that you can unlock those apps is to physically tap the brick again. The idea is that by making you get up and go to the brick after touch your phone to it, you're going to be more intentional about when and why you're using your phone instead of just unlocking those apps on autopilot. I know some other apps, you can go in and just do it from your phone, but, like, physically being forced to, like, get up and tap, it's not a brick to build. It's. It's building something else. Right.

[Sean Pyles]

Building good habits.

[Amanda Barroso]

It's building good habits. Okay, so I got this for Christmas, and I've kind of been experimenting with how it will Help me recapture my attention. I don't know if you guys have this problem too, but just especially during, like, peak family hours on weekdays, I was thinking about, like, what do I want my kids to remember about me? And I do not want them to have this image of their mom, like, sitting around on her phone after school or whatever. Like, I want to be more present. I want to be a more present mom, more present partner. And that's one of my resolutions for 2026. But I was also thinking about the financial piece of this, and I wanted to track my total personal spending in February to see if there's a connection between being on my phone during those hours and spending money. So I don't know if this is how you feel. Like, you log off work.

[Elizabeth Ayola]

Right.

[Amanda Barroso]

It's late afternoon and even into the night. It's like, I tend to make these impulse purchases because I'm just, like, scrolling mindlessly after, you know, after work, after putting the kids to bed, these sort of, like, high stress moments. I'm just trying to turn my brain off. I'm trying to decompress. But I started to wonder if I could use the brick to cut off my ability to spend money so easily, so impulsively, and fill that time with more fulfilling hobbies. Like, started journaling this year. I have some reading.

[Elizabeth Ayola]

Wonderful.

[Amanda Barroso]

Yeah. And my daughter's been kind of journaling with me at night or, like, kind of scrapbooking, whatever. So thinking about the idea of what the money is going to be for. If you've been following along on the no spend thing, one of the goals was the Disney trip.

[Podcast Host / Narrator]

Oh, yeah.

[Amanda Barroso]

And I actually reached out to a Disney travel agent, and we have, like, hard numbers on a trip for my daughter's birthday that would be maybe a.

[Sean Pyles]

Surprise for us or less than $20,000. Disney is.

[Amanda Barroso]

Oh, way less. Way less. Yeah. Anyway, that's a whole. We need to get Sally French.

[Sean Pyles]

That'll be another conversation.

[Amanda Barroso]

Yes. Okay. But, like, having her numbers really helps, so I want to, like, continue to fund that. And actually, we're going to be able to stay at, like, a nicer place than I thought. We're like, we're splurging.

[Kate Wood]

We're splurging.

[Amanda Barroso]

Okay. So that's, like, a priority. I want to add some cash to our emergency fund because. Hello, I'm the wife of a federal worker. It's wild out here. Government shutdowns. We Learned this in 2025. Just I don't know if there's an amount in my emergency fund that would make Me feel safe. So we're just going to keep stacking the cash, you know, I don't know. And then I have some outdoor home maintenance. This is very boring. But do you know how much mulch costs? Like, I don't wanna know.

[Sean Pyles]

Let me give you a gardening hack, Amanda. And this might be a complete aside. There is a service called chip drop, chipdrop.com, i believe it is. And arborists in your area can come and drop a tree's worth of chips in front of your house. It's free mulch. Oh, and it's not dyed with chemicals like black or red or brown. And it's better for your yard. So we can talk offline about this.

[Amanda Barroso]

Yes. You might have just made room. You might have just freed up of that money for something else. I love that idea.

[Sean Pyles]

I have 1 million gardening money hacks, so we can talk about that.

[Podcast Host / Narrator]

Okay.

[Amanda Barroso]

I love this. I love this. Okay, but see, like, this is wonderful. So, like, I do have some really clear places for where I want this money to go.

[Podcast Host / Narrator]

Not to mulch, not to.

[Amanda Barroso]

Yeah, that would be ideal, right?

[Sean Pyles]

Yeah. Well, let us know how much money you save by not doing that online shopping when you're at your most vulnerable after a day of working in parenting.

[Amanda Barroso]

Okay. And here's the thing, though. I started to kind of do the math a little bit ahead of coming on the podcast. I'm going to have to pick a month from last year that isn't February because I was still. I was riding high on my no spend low buy. Like, things were really tight. I need to, like, compare it to June or something when things got a little bit looser.

[Sean Pyles]

So kids are out of school.

[Amanda Barroso]

Right? I'll report back.

[Elizabeth Ayola]

I want to say, Amanda, I am so glad to find someone else who also has a brick. I have.

[Amanda Barroso]

You have one?

[Elizabeth Ayola]

I have a brick. And I've been using it it for a while now. I think I bought it, like, almost two years ago now. And then I just threw it in my drawer. And then one day I was like, enough is enough. Similar to you. I was like, I'm on my phone too much. I'm trying to teach my son not to be on tech all the time, but I'm not modeling that. So I started using the brick. And I also used it to block shopping sites, so I used it to block Zara. I would mindlessly scroll on Zara all the time and end up buying stuff. And honestly, I'm proud to say I barely go on Zara anymore. Now it's just a habit. I Kick the habit. So I don't know the last time I bought anything on Zara. It does help me. And you know, we're on social media. There are always ads to buy things. Always. I'm less. I'm less online now and I shop less online too. I was like the other day, I was like, who am I? I haven't had like the urge to just buy new clothes in a while. Right. So I definitely think it's been helpful.

[Amanda Barroso]

You're giving me some hope that this is going to like, really help me too.

[Sean Pyles]

You guys are kind of selling me on this brick thing. I'm tempted to get one. But we use scrolling and spending as a way to self soothe a lot of the time. And this actually gets me to what I'm doing in February, which is creating more friction in my life, especially around spending. I read this article in the Cut that is titled in 2026 we are Friction Maxing. Did you guys see this?

[Kate Wood]

I saw.

[Elizabeth Ayola]

Yeah, actually I did.

[Kate Wood]

Very good read.

[Sean Pyles]

This is a great piece. So for those who didn't read it, the gist is that, you know, we as a society have really let ourselves become kind of overly coddled by technology, much to our detriment. We're offloading our thinking and our creativity to AI chatbots. And we're so desperate for entertainment at all times that we're scrolling social media while we're watching a Netflix show, while we have an iPad up and we're like playing with our kids at the same time. And you know, the article does talk about parenting too. I'm sure you guys could relate to this and how it can be tempting to just shove that iPad in front of your kid just to get them to kind of calm down. And I realized that we are doing the same thing to ourselves. Like we are iPad kids without even realizing it.

[Amanda Barroso]

We are.

[Elizabeth Ayola]

What an analogy. It's very true.

[Amanda Barroso]

Convicting. Yeah.

[Sean Pyles]

So the idea with Friction Maxing is that you are intentionally rebuilding some of the friction in day to day life to actually enjoy what it means to be a person learning and growing and sometimes struggling as we're alive because that helps you grow over time. So I'm taking this principle and applying it to my money in February. And I'm doing it in a kind of chaotic way just so I don't get bored. So this week, the first week of the month, I'm not going to buy anything online, even books. I have this bad habit of if I see a book I want, I will just go to the Powell's Website. Powell's is the local bookstore in Portland where I go to all the time. And I, instead of just going into the store, I will pre order it and then just go in to pick it up. And I realize it probably takes me just as long to just, like, do that versus going into the store. So why not enjoy perusing the shelves? Which is one of the joys of going to a bookstore anyway.

[Elizabeth Ayola]

Yes.

[Sean Pyles]

And then the following week of February, I'm only going to use cash. And I have not done that maybe ever in my life, actually.

[Elizabeth Ayola]

Wow.

[Sean Pyles]

So I'm gonna see how that goes. The third week of February. I am not going to use my phone to buy anything. Not even tapping Apple Pay at a register. I'll be pulling out my wallet and we'll see how that goes. And then the final week of the month, I'm just going to forego takeout on my phone, which is a bad habit of mine, especially on the weekends. I just want to order food and it gets really expensive because it's so easy to do. I just keep buying more than I maybe would otherwise. So those are how I'm going to be adding friction to my spending in February.

[Amanda Barroso]

Okay. I have to ask about week two about the using cash thing.

[Sean Pyles]

Yes.

[Amanda Barroso]

I'm just thinking about, like, filling up your car at the Palm. You're gonna have to walk into the gas station and friction, pay somebody, man. I mean, and how do you know how much you're gonna take out? Are you gonna, like, do you have a set number in your mind? Like, are you. Are you looking at, like, average weekly expenses and, like, okay, I'm gonna take out around that much? Or are you gonna force yourself to, like, go back to the atm?

[Sean Pyles]

Over and over, you're asking questions I have not asked myself. So I will let you know when I have answers to them. But I imagine I'll take out maybe a couple hundred dollars and see how far that gets me. I'm fortunate that I don't drive a ton, so I actually might be able to get away without filling up my gas tank for a week. Because, yeah, I don't like going into a gas station to give them cash, because how do you know how much is going to fill up your tank? Right.

[Podcast Host / Narrator]

True.

[Sean Pyles]

This will be part of the learning of this experience over the month, and I'll see how I like it. And I honestly don't even know what lessons I might learn from it, but I'm excited to not have spending money be as easy as, you know, opening my fridge for a Lacroix.

[Amanda Barroso]

It's going to be interesting. I think that you might encounter some friction out in the world because there are some shops, some restaurants that say, like, we do not accept cash.

[Podcast Host / Narrator]

Yep.

[Sean Pyles]

I was at a cider house over the weekend that said we don't accept cash at all. And so I would have had to have my friend cover me and then I give them cash. My friends don't want cash, but they might have to accept it.

[Amanda Barroso]

This month you're going to be the weird magical unicorn out there with just cash.

[Sean Pyles]

People are going to be rolling their eyes at me left and right and we'll all have to learn to work through the friction here.

[Elizabeth Ayola]

I'm most excited about as we are all talking about our no spend challenges. But yours in particular, Sean, about all the human interactions that you're going to get that we miss out on because of all the friction we're trying to avoid. I don't want to go to the store and pick it up. Maybe I don't want to talk to anyone today. And then you have this, like, cute little conversation with the person handing you your food or you have the conversation with the person that you're giving cash to your gas. All these little things are what make up the human experience. Right. And sometimes we miss out on them because we want the convenience of doing everything from our bed. Right. And not talking to anyone.

[Sean Pyles]

Let's build some community and use our cash more.

[Amanda Barroso]

Yes. Some things are meant to be hard. Like this whole, you know, you talked about the article that you read and like, part of the human experience is not just being able to glide so seamlessly through life. Right. Even if it's a little thing like, okay, I can't go to this store because they don't accept like, a little bit of friction probably will do us all good, make us a little bit stronger in the new year.

[Elizabeth Ayola]

It makes for a good story.

[Amanda Barroso]

Yeah.

[Sean Pyles]

At the very least it will.

[Kate Wood]

Yeah.

[Sean Pyles]

Well, I'm excited to see how our months go. So Amanda will be checking in with you throughout the month. We might just ask for a voice memo or two. We'll see. And listeners, if you are doing a no spend or money mix up challenge, whatever you want to call it over this month, let us know too. Leave us a voicemail, text us, email us, and we'd love to hear your stories.

[Elizabeth Ayola]

Or leave us a comment on Spotify and tell us how it's going. Or Apple or wherever you get your podcast. All right, we're about to get into this episode's money question. Where we talk through whether it's a better idea to focus on paying off student loans while you're in grad school, or if that money would be better used towards paying your mortgage down.

[Sean Pyles]

But first listener, take just a second and think about where you might need some nerdy help with your money. Do you have a question that you just can't seem to work through? Or are you maybe struggling with what to prioritize in your finances?

[Elizabeth Ayola]

Whatever your money question is, we the nerds are here to help you. So send us a voicemail or text us on the Nerd hotline at 901-730-6373. That's 9017-30-Nerd.

[Sean Pyles]

Or email [e-mail] all right, this episode's Money question is coming up next. Stay with us.

[Podcast Host / Narrator]

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[Podcast Host / Narrator]

We're back and answering your money questions to help you make smarter financial decisions. This episode question comes from Sydney who sent us an email. Hi Nerdwallet friends in my head, I am a 34 year old full time nurse, married with no children, currently managing a student loan balance of roughly $30,000 with a monthly payment of $500. Based on my calculations, I have about three years of payments left before qualifying for Public Service Loan Forgiveness. I'm also starting my Master's degree. My husband and I currently own a home, but are planning to sell and purchase a new one closer to work. Earlier this year I also had to purchase a new car due to commute demands, resulting in a monthly car payment of nearly $600. Both my husband and I have excellent credit. He carries roughly $50,000 in student loans but no car payment. We maintain just under three months of savings in a high yield savings account as we navigate these financial and life transitions.

[Elizabeth Ayola]

Now, to help us answer Sydney's question on this episode of the podcast, we have lending nerd Kate Wood. Kate, welcome back to Smart Money.

[Kate Wood]

Oh thank you for having me back.

[Podcast Host / Narrator]

So a lot has happened in the world of student loans and repayment options over the past year or so. So Kate, to kick things off, can you outline how Public Service Loan Forgiveness works exactly, just so we know what we're working with here?

[Kate Wood]

Sure. So Public Service Loan Forgiveness is a program that lets people who work in qualifying jobs and that includes a lot of folks. It includes nurses like our listener, people who work for nonprofits, people who serve in the military, people who work for any level of government to get their student loan balances discharged, aka forgiveness after making 120 payments while they are working in those jobs. So after the equivalent of 10 years worth of payments, whatever you still owe is going to be forgiven. The really vital part here is the while working in those jobs aspect. So it's not about how long you've had the loans or how many payments you've made overall, it's about how many qualifying payments you've made. So it doesn't have to be 10 consecutive years of payments. Just over however many years you have the loan, you have to have made 120 payments while you are working for a qualified employer. So in the case of someone like Sydney, who's currently in graduate school and her loans are in deferment, she's not making payments. So that time that she's spending in that deferment is not counting toward PSLF forgiveness. Even if she were to make payments during this time, so long as she is technically in deferment and does not have a payment due, that payment would not count toward pslf.

[Podcast Host / Narrator]

It wouldn't be a qualified payment.

[Kate Wood]

In this case, something that Sydney could choose to do would be to decline the loan deferment. That way, if she's declined the deferment and she's making payments, those would count toward pslf. However, that would only be the case if she is not only going to school, but also maintaining at least 30 hours per week of employment with a qualified employer. If she were to take out new loans for this new graduate program, that's a whole, whole other thing. So those could also potentially qualify for PSLF if she does continue in the field of nursing or in another qualifying field. But those new loans would be on a separate timeline from her existing loans. So she's estimating that she has about three years of payments left on the loan she already has. But those new loans would have their own 10 year timeline.

[Amanda Barroso]

Sheesh.

[Elizabeth Ayola]

So many rules going on here. But Kate, repayment plans are changing later this year. More rules for us. Would that affect these new loans?

[Kate Wood]

That would extremely affect these new loans. So if she were to take out new loans for a new graduate program, so based on her question, it sounds like she's in this graduate program now. But let's say hypothetically, this is a new program that she is starting next year. Any new loans taken out for a new degree after July 1, 2026 will only have two repayment options, the new version of the standard repayment plan or the repayment assistance plan, which is the new income driven plan. If this is a program that she's continuing, so she's already been enrolled in this program already in graduate school, she can continue on with the old rules for up to three years or until you finish your degree, whichever shorter. That means that the other income driven repayment plans, income based repayment income, contingent repayment, and pay as you earn or paye, those would all still be available. But if she takes out any new loans, all of her loans would then move on to one of these new repayment options, both the existing loans and the new ones. So if you take out additional loans, you will no longer be eligible for any of the existing income driven repayment plans.

[Podcast Host / Narrator]

So, Kate, just so I'm totally clear, these payment plans that you just outlined, they run sort of parallel to pslf, right?

[Kate Wood]

Yes. So PSLF is separate entirely from your actual repayment plan. So most people who are on PSLF are kind of looking to pay as little as they can right before that balance is forgiven. So in many cases, folks are on one of the income driven repayment plans because those generally have lower monthly payments. Unless you were, you know, particularly high income, then you might be seeing a payment that would be comparable to what you'd get on one of the standard plans. But for a lot of people, income driven is going to give them a lower payment. So folks are picking a repayment plan. They're making 10 years worth, 120 qualifying payments, whatever repayment plan they're on. And then those 120 qualifying payments are what will eventually get them PSLF. So PSLF is separate from the forgiveness that you hear about with the other income driven repayment plans. In those cases, depending on which plan you're on and when you entered it, and a lot of other things, the earliest that you would see forgiveness would be after 20 years worth of payments. With the new plan that's cut. Yeah. With the new plan that's coming up, the repayment assistance plan, it's going to be 30 years worth of payments.

[Podcast Host / Narrator]

That's a mortgage.

[Kate Wood]

Yes. Oh my gosh, I haven't thought about it that way before.

[Elizabeth Ayola]

That is a mortgage, Kate, is there anything else that makes PSLF different?

[Kate Wood]

So one other difference about PSLF, in addition to the you get forgiveness after 10 years, which is a huge plus, the other good news is that after you reach that 120 payment mark, your remaining loan balance is forgiven and you will not have to pay taxes on it. You might have heard a lot in the news lately about the idea of a student loan tax bomb. PSLF forgiveness is not going to be affected by that because PSLF is never taxed at the federal level. The whole student loan tax bomb topic is a topic for another time for sure. But bottom line here, that does not apply to PSLF borrowers.

[Podcast Host / Narrator]

Yeah, it sounds quite scary and maybe dangerous for your finances. So we will definitely have you want to talk about that sometime soon.

[Elizabeth Ayola]

Well, now that we know how this whole program works, thanks to your explanation, Kate, let's get to what's new with the program and loans for graduate school because things are looking pretty different from how they were a year ago, which I'm sure you know, Kate, because you're in the know. One change that might not apply to our listener, depending on whether she plans to take out additional loans for her graduate degree, is that late last year, the Trump administration put out a proposal to reclassify nurses as not professionals. There was a lot of social media uproar about that, by the way, and therefore, they would be eligible for lower amounts of federal loans for graduate school. How might this impact those going into the nursing field?

[Kate Wood]

So this is another aspect where it kind of depends, at least for our listener Sydney, where she is in her program, if this is a program that she's already begun, she's not going to be subject to these new rules either until she finishes the degree or for three years. But if this is a brand new program that she's starting and if she takes out new loans for it, she would be subject to this. So in a nutshell, the One Big Beautiful Bill ACT got rid of Graduate plus loans. And if you're like, what is a Graduate plus loan? Basically, if you are currently in grad school or if you've had federal student loans to go to grad school, those were the loans you had. It just. That's what the graduate student loans were called. So with Grad plus loans, you could borrow up to your program's cost of attendance. So whatever it costs to go inclusive of, like tuition fees, the estimates for, you know, lab fees, other costs like that, you could borrow up to that. Now, because of the One Big Beautiful Bill act starting for new graduate loans next year, they are going to be subject to borrowing caps. So most graduate degrees, including, controversially, nursing, are subject to the lower cap, which is $20,500 per year or $100,000 lifetime. The areas that have been designated as professional degrees have higher caps, 50 grand a year or 200,000 lifetime.

[Podcast Host / Narrator]

I mean, depending on the profession that you're pursuing, I imagine that these caps wouldn't cover what you might need to take out.

[Kate Wood]

This has been controversial since day one. Tuition is really high. We know this. The median cost for four years of med school for students who graduated this past spring, for example, is nearly $300,000 for public universities and over $400,000 for private. That's data from the American association of Medical Colleges. The median debt that folks are taking on, $200,000 for those who went to public school, $250,000 for private. Additionally, with these lending caps, very few degrees qualify as professional degrees. So on one hand, nurses are excluded. And we have heard a lot about nursing being excluded, but there are only like 44 degrees total that actually qualify as professional. And the definition that they're drawing on comes from the 1965 Higher Education Act. So it's not particularly inclusive. And also, I would say, even for fields that are considered professional under this bill, a lot of professional organizations, notably the AMA or the American Medical association, have complained that these borrowing caps are just too low.

[Podcast Host / Narrator]

A cynical person might posit that these borrowing caps are just potentially designed to push people into private loans, which could be more expensive and make people in the banking world a lot of money at the expense of borrowers.

[Kate Wood]

That's. That's definitely something that one could posit in theory. The sort of thinking behind this is that if we put in these borrowing caps and this is the maximum amount that students can pay, then schools will be forced to lower their tuition. Not super how capitalism usually works, but, you know, in theory, that could put the squeeze on schools. The reality is, though, I mean, like you were saying, Sean, we might see a lot of students turning to private loans and, you know, we might just simply see people turning away from these fields entirely. There are, you know, really serious concerns that existing shortages that we already have in medical fields, including nurses, are just going to be exacerbated if people feel like, well, you know, how can I go into this? How am I going to, you know, pay for it? There are, you know, very valid concerns that these limits could dissuade people who are from groups that have historically been underrepresented in these fields. So that could be people from underrepresented minority groups, first generation college students, students from rural areas. Those groups are already underrepresented in medical fields. And that this could dissuade people even further from going into them. So then you're ending up with medical practitioners who don't reflect the diversity of the actual population.

[Elizabeth Ayola]

I will say, just as I'm hearing all these numbers thrown around, these mortgage numbers for education, it just makes me think back to my undergraduate degree. I did mine in the UK and I at the time didn't pay more than $10,000 for three years of schooling. Sorry, £10,000, correct me, £10,000, which is still way cheaper.

[Podcast Host / Narrator]

I am so jealous. That was a year for me.

[Elizabeth Ayola]

And my post grad was like, and I know the type of degree that you choose, you know, influences the prices low, but was around five or six thousand pounds. So I'm like, people are paying 100,000, 200, $300,000 for school. Yeah, that's. Wow.

[Kate Wood]

It's a lot.

[Podcast Host / Narrator]

Yeah, yikes. Well, moving on, the one big beautiful Bill act didn't directly impact pslf, but that said, the Trump administration has taken steps to tighten the program's Eligibility. And many with the opportunity to take advantage of this program probably feel anxious about whether this loan forgiveness program is actually going to pan out for them. It seems like our listener is in that camp, too. So I feel for you, Sydney. So, Kate, can you outline these recent changes and maybe what's the best course of action for those who are hoping to have their loans forgiven but are just really anxious that this program might cease to exist?

[Kate Wood]

As you mentioned, one big, beautiful bail act didn't directly affect pslf, but PSLF had already been tinkered with a little bit. So at this point, it sounds like a long time ago, but way back in March 2025, President Trump issued an executive order that said that employers who otherwise would qualify for pslf, but who engaged in, quote, unquote, illegal activities would lose that PSLF eligibility. So in other words, if you're a student loan borrower, you're in repayment, you're working for these employers, you would no longer be eligible for forgiveness with pslf. The language throughout is highly partisan, but the gist of it is that organizations that engage with issues like immigration, reproductive rights, really anything, diversity, equity and inclusion could be stripped of qualification. That was finalized back in late October 2025. So last fall, where they basically laid out a process for how these employer reviews would work, how they'd be notified, what that kind of timeline would be, how this would actually look, and who would decide what is or is not illegal still hasn't really been decided.

[Elizabeth Ayola]

Well, Kate, how are people responding to this?

[Kate Wood]

Like Sydney mentioned, there's a lot of fear, there's a lot of anxiety about, okay, what does this mean? Is this going to cease to exist? And as with so many things with student loans, it's a wait and see, right? It's a wait and see. And I'm sorry, that was a big sigh and a wait and see. That's not what you're hoping to hear. I will say, on the optimistic side, this brought about a really swift reaction. So when we got that finalized ruling, ruling in October, two major lawsuits were brought right away against the Education Department. So one was brought by a group of state attorneys general, and the other one was brought by a group of municipalities, labor unions, nonprofits that all kind of teamed up. So that one in particular is interesting because cities, like entire cities, are concerned that if they are a place that's been deemed a sanctuary city, then all of their employees, so teachers, police, folks like that, could theoretically lose PSLF eligibility, which would be, you know, really detrimental for a huge number of reasons it is super stressful for borrowers. But it is important to remember that nothing is happening yet. Like, these are strong lawsuits that are being brought. And at minimum, these could hold up implementations of these changes for months or potentially even years. If PSLF forgiveness is your goal and you're working toward it, keep working at your job, or again, at any job with a qualifying organization, you can switch jobs. You don't have to stay at one job for every single one of those 120 payments. So those payments will still count as long as you're with a qualifying employer. Since again, we don't really know, you know, which kinds of employers might lose qualification or how it could look. It doesn't make sense to jump to conclusions based on this, like it could happen worry.

[Elizabeth Ayola]

Yeah, thanks for emphasizing that, Kate, because I know sometimes we can get scared and make like fear based decisions. Right. So could the Trump administration, including the Department of Education, just wake up one day and decide to cancel the PSLF program?

[Amanda Barroso]

Or.

[Elizabeth Ayola]

Or would it take congressional action?

[Kate Wood]

It would indeed take congressional action. So PSLF was created by Congress and it has historically had strong bipartisan support. After all, I mean, we're talking about supporting people who choose to go into helping professions, right? Like emergency medical personnel, you know, teachers, firefighters, stuff like that. It's kind of hard to argue against. And so pslf dates to 2007. You know, it was introduced by Congress during George W. Bush's administration. The first Trump administration did actually try and fail to kill pslf, which is why we're now probably seeing them take different tactics, in this case, potentially restricting access to pslf. I will say also for what it's worth, in terms of, you know, talking about these presidential administrations doing executive orders and executive actions and stuff like that to try to make changes. The Biden administration, 100% did that stuff as well. They were also using executive action to make changes to pslf. In that case, though, they were expanding access. So hit a little bit different. We've gone like so far, though, into the stuff that I know about. Let's go into a bit more of like what you guys know about and the other part of Sydney's question, whether she should focus on paying off her student loans or put more toward other goals, notably a down payment on a home.

[Podcast Host / Narrator]

Right. This is a classic financial priorities question. And we get these all the time in different facets. But I always find them so interesting because the question is really whether to keep paying off these loans to achieve PSLF as soon as possible. And I understand Sydney's urgency behind that because I would feel pretty anxious if I was in their position. Or do they want to take advantage of the opportunity to stop making payments while in grad school and direct that $500 a month elsewhere, which is not insignificant amount of money, Especially since Sydney's car payment is $600. That's a lot to put toward a car every single month. And you know, ultimately this comes down to a question of priorities, which is really, really personal. What does Sydney value in how they're managing? So they could consider whether they have any other pressing areas of their personal or financial life that they want to put money toward instead as well. Like for example, we don't know what Sydney's retirement situation is like. They said that they're 34 years old. How much do they have saved for retirement so that they can actually fund life after their working years? Something else that comes to mind is that Sydney said that they have just under three months of emergency fund savings. I think that that is a little on the lower side, giving some of their uncertainty. They might want to consider putting more money into that account.

[Elizabeth Ayola]

I think I personally would pay off the P S LF loans. That would be my choice in this scenario. And simply because like you said, Kate, nothing is written in stone yet. Would it be amazing for all my loans to be paid off after a period of time? And I could use all of that bulk cash to do exactly what Sean said, bulk up my emergency fund, of course, go on vacation. You can edit that out and just do other things that are really fun.

[Sean Pyles]

We're keeping that in.

[Elizabeth Ayola]

So, yeah, I would definitely stick with paying off the loans.

[Podcast Host / Narrator]

And Kate, what would you do?

[Kate Wood]

I would also stick with paying off the loans. However, I really want to emphasize yet again that we don't have any actual reason to assume that PSLF is going away. The administration might make it a lot harder to get forgiveness, but forgiveness isn't going anywhere. So I would focus on the right now goal of buying a home. I just wouldn't forget about the longer term goal of hey, we want to get rid of the student loan debt. So a couple of steps that I would take personally. One, I would go through my paperwork to figure out exactly what my payment count is. There's no longer a counter on studentaid.gov. this is something that used to be there for IDR. So you could see, okay, this is how many payments I've made that's not there anymore. Loan servicers we know can be inconsistent, can make mistakes. So I would look really closely at My payment history and because it's pslf, also my employment history, make sure I know exactly how long I really have left on those loans. Because I'm trying to focus on other goals like bulking up my emergency savings or making a down payment. I'd also do whatever I can to minimize my monthly student loan payment. So even though repayment options are changing for new borrowers, for current borrowers who don't take out any additional loans, if we don't take out any new loans, you still have a number of options. Income based repayment, income, contingent repayment, pay as you earn, are all still technically available to you. Two of those, ICR and PAYE are going to go away after 2028. But you know what, with PSLF, if she's looking at, you know, three years of payments, if you can get two years of a lower payment, take that two years, right? Because you're trying to get forgiveness, get as much forgiven as possible, pay as little toward that balance as you can, right? You really want to maximize the amount that is forgiven, minimize the amount that you're actually paying. Again though, because of all these changes, if she were to take out new loans for this grad program, assuming that she's starting the grad program in 2026, so that would count as not only new loans but new graduate program, we are not under the old rules, that would change everything. And again, those loans will have their own 10 year timeline. That's a whole other thing to consider. There is so much to think about and I am sorry for throwing out so many numbers.

[Podcast Host / Narrator]

I mean, we appreciate you doing it because it's a complex topic. But you talking about how important it is for people who are in this program to track their qualified payments and their employment history, that makes me wonder about the actual forgiveness itself. Is it automatic or are people in this situation going to have to maybe make the case of hey, here are all of my payments, here's where I was working when I was making these payments. They are qualified and kind of have to fight for themselves to get this forgiveness.

[Kate Wood]

So forgiveness is meant to be automatic. So basically servicers are going through, at the Education Department's direction, are going through records saying, okay, these are the people who met this goal at this time. That said, things have been moving incredibly slowly and we have seen a lot of issues with forgiveness being dispersed, not necessarily in terms of PSLF forgiveness specifically, but just overall. So we've been in a situation for several months now where we were in a situation previously where forgiveness was not being processed. At all. So one of the ongoing lawsuits against the Education Department was brought by the American Federation of Teachers. They have been really strong advocates because in particular, PSLF is something that very much affects their membership. Right. Teachers are heavy users of the PSLF program. And so they have really strongly advocated for making sure that we're holding the Education Department accountable and that things are moving forward, that borrowers are getting what they were promised when they took out these loans. So as part of that lawsuit, they were like, so we noticed that you guys are not processing forgiveness and you need to start doing this. That's my. That was the exact legalese that was used for that. So they were able to get income based repayments. So IBR borrowers are starting to see forgiveness being processed. We started to see that, like, Right. Actually it was right around the shutdown, so it was like October that we started to kind of see that happening. People who are on PAYE pay as you earn plan, people who are on ICR income contingent repayment. We are still trying to like get the wheels moving again so that forgiveness is processed for people on those plans. So there are currently a substantial population of people who have actually reached the forgiveness timeline. Whether it's 10 years, PSLF, 20 or 25 years, it's just the regular way on one of these other plans and who are waiting to have that forgiveness actually processed. On one hand, yay. It's a good situation because this loan balance should be gone. On the other hand, because the loan balance is technically still active, you need to do something about it. So these folks are either stuck working with their servicer to get a deferment or forbearance so that they aren't having to make payments during this time, or something else that the AFT lawsuit forced the Education Department to codify and guarantee was that if you made extra payments during this time, so if you just kept paying your loan because you kept having payments due, that you would get that paid back to you once your loan balance is forgiven. It's a lot.

[Podcast Host / Narrator]

I would like that to be a payback with interest for all the trouble.

[Elizabeth Ayola]

Yeah, right.

[Podcast Host / Narrator]

Yeah, that's gonna happen.

[Kate Wood]

Yeah, it should be, but yeah.

[Podcast Host / Narrator]

Well, so it seems like this is yet another situation where people have to be their best, most informed advocate.

[Kate Wood]

Absolutely.

[Podcast Host / Narrator]

Or be part of a union that can help advocate on your behalf.

[Elizabeth Ayola]

I have a third option if I decide to change my career and become a nurse or a teacher. It sounds like GoFundMe is a lot more straightforward.

[Podcast Host / Narrator]

So I thought you were going to say we're going to burn it all down, Elizabeth. But you know, GoFundMe is a nice option too.

[Kate Wood]

Yeah.

[Sean Pyles]

Geez.

[Elizabeth Ayola]

All right. All right.

[Podcast Host / Narrator]

Well, Kate, thank you so much for coming on and explaining what is quite a complex but really topical subject.

[Amanda Barroso]

Of course.

[Kate Wood]

Thank you for having me back.

[Podcast Host / Narrator]

And if folks want to hear more about the best student loan products and other loan products, they can check out NerdWallet's Best of Awards. You can find that at NerdWallet.com, that's all we have for this episode. Remember that we're here to answer your money questions, so turn to the Nerds and call or text us your questions at 901-730-6373. That's 901-730-N E R D. You can also email [e-mail] and we want you.

[Elizabeth Ayola]

To join the Smart Money Party next time to hear about how to handle taxes when you're self employed. Yes, the party is this show. Follow Smart Money on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

[Podcast Host / Narrator]

Here's our brief. We are not your financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

[Elizabeth Ayola]

This episode was produced by Tess Viglund. Hilary Georgie helped with editing. Nick Christme mixed our audio and a big thank you to NerdWallet's editors for their help.

[Podcast Host / Narrator]

And with that said, until next time, turn to the nerds.

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