NerdWallet's Smart Money Podcast - Impulse Spending Fixes and PSLF Choices When You’re in Grad School

Episode Date: February 2, 2026

Get ideas for spending less in February and learn how deferment affects Public Service Loan Forgiveness (PSLF) payments. How can a month-long spending challenge reset your money habits? Should you keep paying student loans while in grad school if you’re close to Public Service Loan Forgiveness and planning a move? Hosts Sean Pyles and Elizabeth Ayoola discuss no-spend experiments and “friction” strategies to help you build spending habits that stick while juggling big life changes. Joined by personal finance Nerd Amanda Barroso, they begin with a discussion of designing a February no-spend challenge, with tips and tricks on setting rules that fit your life, deciding where the saved money will go, and avoiding a binge-and-purge rebound. Then, lending Nerd Kate Wood joins Sean and Elizabeth to help answer a listener’s question about how to weigh student loan payments against saving for a new home. They discuss how deferment affects qualifying PSLF payments, what to check before switching repayment plans or taking out new grad school loans, and how to prioritize cash flow when you’re balancing a car payment, a mortgage, and an emergency fund. See NerdWallet’s list of the best private student loans: https://www.nerdwallet.com/student-loans/best/private-student-loans  See all the winners of NerdWallet’s Best-Of Awards: https://www.nerdwallet.com/l/awards?utm_source=sm&utm_medium=podcast&utm_campaign=cm_organic_020226_podcast_sm_desc_allepisodes_best-of-awards  Want us to review your budget? Fill out this form — completely anonymously if you want — and we might feature your budget in a future segment! https://docs.google.com/forms/d/e/1FAIpQLScK53yAufsc4v5UpghhVfxtk2MoyooHzlSIRBnRxUPl3hKBig/viewform?usp=header In their conversation, the Nerds discuss: no-spend challenge, low-spend challenge, spending freeze, budgeting challenge, money habits, impulse spending, track expenses, friction-maxxing, cash-only budget, stop online shopping, takeout spending, spending triggers, phone addiction and spending, Brick phone blocker, attention and spending, sinking fund, emergency fund, high-yield savings account, student loan deferment, student loan payments in grad school, Public Service Loan Forgiveness, PSLF qualifying payments, PSLF payment count, qualifying employer PSLF, income-driven repayment, PAYE repayment plan, Income-Based Repayment, Income-Contingent Repayment, Repayment Assistance Plan, graduate student loan changes 2026, Grad PLUS loans, federal student loan borrowing limits, professional degree loan cap, nursing graduate student loans, buying a house with student loans, mortgage planning, moving costs, car payment budget, and student loan forgiveness uncertainty. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

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That's TechCrunch Daily Crunch, wherever you get your podcasts. Sometimes your money habits just need a hard reboot. 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. As in, like, right now. Yes, right now. Let's do it. Welcome to Nerd Wallet'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 Piles. And I'm Elizabeth Ayola. On this episode, we're going to answer listeners' question about whether to keep making student loan payments while in grad school or put that cash towards a new house. But first, Elizabeth and I are going to 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. Hi there. So Amanda, Elizabeth, are you guys big, no spend people? What's your thoughts here? 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 it's maybe not structured around a single month like we're talking about. No, no, no. It's just whenever I need to cut my spending down. Amanda, I know you do have some experience with this. Yeah, I mean, this is a recent thing for me. I've been on the podcast a few times talking about my low spin challenges last year.

And then I also tried thrifting my kids' Christmas gifts for Christmas last year. But no spend challenges are a fairly new thing for me. I think the thing is, is like 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. But. Oh my God. Oh, Wussah. There are some things that I can control, choices that I can be more conscious about making, like my spending. So that's where 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 as 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. 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, 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 fundamentally have an issue with your spending and it's rooted to, I don't know, or 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? Yeah. So how can people get more from one of these month-long challenges? 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. For me, at least,

it's super important to know 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? 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 overspend. Is your birthday in December?

No. You're trying to be funny. see, but yes, I tend to treat myself too much in December and then 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. 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? 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, 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, you know, out of whack. It can be hard to say no to those things. It is hard. What's your mindset when you're saying now? How do you choose which one to say yes to? 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, 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. So I think that's enough. 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. Are you planning on turning this month into a longer-term habit? Or is it still kind of correcting some overspending from your birthday? That is such a actually. 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 thinking funds, Sean.

I know you're happy about that. Opening more accounts. I love a significant fund. I have like nine right now in my. You and me both Amanda. Yeah. I never. I was like, that's too much management.

But hey, girl, maybe you need a bit more management. Direct deposit. Easy peasy. Exactly. So I'm like, I'm actually going to save towards my birthday this year versus being like, oh, surprise. I don't know how much I'm spending. So 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 fun for it will help me kind of avoid this January. Oh no, I have to pull back my spending. Listen, how good will you feel January 2027 knowing that you cash flowed your birthday? That you

Absolutely good. December, you open up that sinking fund and you have X amount of dollars and, you know, you treat yourself heavily. Exactly. I think that that's wonderful. 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. I love that. I love that. So y'all going to have to check in with me. Hold me accountable. We will hold you accountable. You know I will.

So Amanda, what about you? How are you going to mix things up this month? Okay. So I got a brick for Christmas and I've been... Like to build a house? Okay. Okay. For those of you 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 act. 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, have to 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 building something else, right? 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, phone during those hours and spending money. So I don't know if this is how you feel like you log off

work, right? 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 goals. 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-spin thing, one of the goals was the Disney trip. Oh, yeah. 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 surprise for her. Is it more or less than $20,000?

Disney is so expensive. Way less. Yeah, anyway, that's a whole, we need to get Sally French on the phone. Yeah, let me another conversation. 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.

We're splurging, 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, it isn't cheap. I don't want to know. 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 arborist in your area can come and drop a trees 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. Yes, you might have just made room. You might have just freed up some of that money for something else.

I love that idea. I have one million gardening money hacks. So we can talk about that. Okay. I love this. I love this. Okay. But see, like this is wonderful.

So like I do have some. some really clear places for where I want this money to go. Not to mulch. Not to, yeah, that would be ideal, right? Yeah. 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. 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. Kids are out of school. Right. I'll report back. I want to say, Amanda, I am so glad to find someone else who also has a brick.

I have a book. You have one. I have a brick. And I've been using 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 site. So I used it to block Zara. I would minus Leash Sproll 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 I don't, I kick the habit. So I don't know the last time I've bought anything on Zara. It does help me. And you know when we're on social media, there are always ads to buy things. Always. I'm less online now. And I shop left online too. I was like, the other day I was like, who am I?

I haven't had like the urge. should just buy new clothes in a while, right? So I definitely think it's been helpful. You're giving me some hope that this is going to like really help me too. 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? Yeah, actually, I did.

It was a great piece. So for those who didn't read it, the gist is that 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.

had 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. We are. What an analogy. It's very true. Convicting. Yeah.

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 shells, which is one of the joys of going to a bookstore anyway. 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. So I'm going to 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. 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. Okay. I have to ask about week two about the using cash thing. Yes. I'm just thinking about like filling up your car at the palm. You're going to have to walk into the gas station and pay somebody. Man. I mean, and how do you know how much you're going to take out? Are you going to like do you have a set number? in your mind. Are you looking at like average weekly expenses and like, okay, I'm going to take out around that much? Or are you going to force yourself to like go back to the ATM 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 in CFR 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 get them cash. Because how do you know how much is going to fill up your tank, right? True. 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 LaGroix. 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. Yeah. I was at a cider house over the week. 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 this month. You're going to be the weird magical unicorn out there with just cash.

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. I'm most excited about, as we're all talking about our no spend challenges, but years 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. 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. Let's build some community and use our cash more. Yeah. 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. It makes for a good story. Yeah. At the very least, it will. Yeah. Well, I'm excited to see how our months go. So Amanda, we'll 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. 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. 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? 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 901-730-673.33. That's 901-730 nerd. Nerd. Or email us at podcast at nerdwollet.com. All right, this episode's money question is coming up next. Stay with us. On Who Arted, we discuss art in a way that's fun and accessible for everyone who wants to explore the visual arts in an audio medium. Each week, we focus on the stories that make up art history, with emphasis on finding the good in all sorts of artworks, and I mean all sorts. I cover the traditional stuff you'd learn in any art history course, but with fun facts your professor probably never shared. Art is all around us, and art should be accessible for all of us. Who Arted is dedicated to celebrating the artists and artworks that shape our perceptions of the world

while helping us envision a better tomorrow. So please follow Who Artid wherever you get your favorite podcasts. We're back and answering Your Money Questions to help you make smarter financial decisions. This episode's 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-old savings account as we navigate these financial and life transitions. Now to help us answer Sidney's question on this episode of the podcast, we have Lending Nerd, Kate Wood. Kate, welcome back to smart money. Oh, thank you for having me back. 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? 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 forgiven 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 well 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, 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.

It wouldn't be a qualified payment 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. Sheesh, 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? 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-e-errown-P-A-Y-E, 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. So Kate, just so I'm totally clear, these payment plans that you just outlined, they run sort of parallel to PSLF, right? Yes. So PSLF is separate entirely from your actual repayment plan. So most people who are on PSLF are kind of looking to pay out.

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 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 coming up, the repayment assistance plan, it's going to be 30 years worth of payments. That's a mortgage. Yes. Oh my gosh. I haven't thought about it that way before. That is a mortgage.

Kate, is there anything else that makes PSLF different? 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 borrow.

Yeah, it sounds quite scary and maybe dangerous for your finances. So we will definitely have you want to talk about that sometime soon. 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 how. 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? 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're currently in grad school or if you've

had federal student loans to go to grad school, those were the loans you had. It's 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 ergos that have been designated as professional degrees have higher caps, 50 grand a year or 200,000 lifetime.

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. 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 a public school, $250,000 for private. Additionally, with these lending caps, very few degrees qualifies 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. 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 bar. 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 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 disway people even further from going into them. So then you're ending up with, you know, medical practitioners who don't reflect the diversity of the actual population. 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 pounds. Correct me. 10,000 pounds, which is still way cheaper. I am so jealous. That didn't change. People are paying. And my post grad was like, and I know the type of degree that you choose, you know, influences the price as low, but it was around five or six thousand pounds. So I'm like, people are paying $100,000, $300,000 for school. Yeah. Yeah, that's, wow, it's a lot. 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 were given but are just really anxious that this program

might cease to exist? As you mentioned, one big beautiful bill 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 quote, 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. Well, Kate, how are people responding to this? Like Sidney 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 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. 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 or would it take congressional action? 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. 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 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. 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 an 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 ultimately, this comes down to a question of priorities, which is really, really personal. What does Sydney value in how they're managing their finances? 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 safe a 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. I think I personally would pay off the PSLF 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. We're keeping that in. So, yeah, I would definitely stick with paying off the loans. And Kate, what would you do? 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 student a.gov, the system 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 bilking 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, so 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-earned 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 tenure timeline. That's a whole other thing to consider. There's so much to think about. And I'm sorry to throwing out so many numbers. 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 like 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. 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've, you know, 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 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 lead. That was the exact legalese that was used to use 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 on 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 most 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 codifying 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. I would like that to be a payback with interest for all the trouble. Yeah. Right?

That's going to happen. Yeah. It should be. Yeah. Well, so it seems like this is yet another situation where people have to be their best, most informed advocate. Absolutely. Or be part of a union that can help advocate on your behalf.

I have a third option. If I decide to change my career and become a nurse or a teacher, it sounds like GoFundMe. It's a lot more straightforward. So I thought you were going to say, we're going to burn it all down, Elizabeth. GoFund me is a nice option too. Yeah. Geech. All right. Well, Kate, thank you so much for coming on and explaining what is quite a complex but really topical subject. Of course. Thank you for having me back. 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 nerdwollet.com slash awards.

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