How to Pay Off Student Loans Fast

This karate-chop strategy worked like a dream for YNAB teacher, Ernie.


Ernie, a teacher here at YNAB, and his wife Christy, a post-adoption coordinator, live in Eau Claire, WI. While they’ve never felt overly burdened by the amount of their debts, they’re not thrilled by how long it’s taking to pay it all off. Can you relate? Overwhelmed by the idea of a lifetime of debt repayment, they decided it was time to hunker down and figure out how to pay off their student loans fast.

Ernie said, “Besides our mortgage and one credit card, the only debt we have right now is my federal student loan balance, and it has probably taken us 10 years to get to this point. In the personal finance space, this has felt like an eternity. I knew we didn’t qualify for a student loan forgiveness program, deferment, or forbearance, so it was time to make a big money move. We set a goal to get rid of student debt for good.”

How to Tackle Student Debt

While paying down debt quickly has its perks (it can be extremely motivating for some), it clearly hadn’t been a winning strategy for Ernie and Christy. He said, “I tried doing the ‘make massive biweekly payments and pay it all off in 18 months’ thing, but it never worked. It just wasn’t us. We had other financial goals to tackle, and those needed dollars too!”

Instead, they’ve chipped away at their balances bit by bit, autopay by autopay. As of last month, Ernie says they’re on track to be student debt-free by the end of this year! To stay motivated, Ernie suggests the following:

1 – Focus on a Single Debt

If you’ve got multiple debts, pick one to focus on. Just one. Then pay as little attention to your other debts as possible, making minimum monthly payments on those until you knock out your selected debt. 

Some call this the snowball method: paying off your debts in order from smallest to largest. Once your smallest debt is paid off, money you were paying toward that gets reallocated to your next largest balance. 

If you’ve got multiple debts, pick one to focus on. Just one. Then pay as little attention to your other debts as possible, making minimum monthly payments on those until you knock out your selected debt.

Some call this the snowball method: paying off your debts in order from smallest to largest. Once your smallest debt is paid off, money you were paying toward that gets reallocated to your next largest balance.

With the Biden-Harris Administration’s recent announcement of student loan forgiveness, your snowball might be rolling faster now! If the debt relief affected you, you’re now $10,000 or $20,000 closer to allocating the student loan payments you’ve been making toward your next biggest debt.

If you want to see the oh-so-effective snowball method in action, check out Hannah’s explanation. Yes, there’s a frozen snowball and a hammer involved.

In the debt avalanche method, there are bonus points for tackling those high interest loans first. That high interest loan may very well be your student loan, especially if it came from a private lender. 

Ernie said, “I used to track every debt each month. I’d write down how much of the principal I paid and the current balance. I’d roll all that up into one big total debt number. This was fun for a while, but I lost interest. There just wasn’t enough movement on every debt to keep me inspired, and the total debt number was overwhelming. Choosing a single debt to focus on kept me on track, and the snowball method progress was much more visible! When I used YNAB’s loan planner to focus exclusively on my student loan debt, I felt ready to take a deeper look at refinancing options and learn more about repayment options from my student loan servicer.”

Now, he only checks his principal balances on a quarterly basis—out of sight, out of mind—but Ernie still watches the other debt that he’s actively paying down with minimum payments. He said, “Seeing that number change every month keeps me motivated and in the game.”

2 – Earmark All of Your “Extra” Cash to Make Additional Payments Toward Your Student Loan Debt 

Meet Ernie’s Karate Chop Strategy: Send any and all extra money to student loan repayment!

Make a commitment to send any and all extra money to the debt that you’ve selected. This includes work bonuses, tax returns, birthday money, side hustle income, and any other unexpected funds. 

Ernie said, “Once I made this commitment, I was shocked by how much extra money came my way. At the time, this included bonuses from my other job, birthday money, cash back from credit card points, landscaping work I did, class action settlements (seriously, this one was the best!), Facebook Marketplace sales, etc. It was $6 here, $20 there. Not huge amounts, but the extra payments gave me momentum on karate chopping my student loans.”

And by deciding to send all of his extra cash to student loan debt repayment, Ernie was fully committed when the money came his way. He said, “Instead of thinking, ‘Wow, I just got $60 for this class action lawsuit! How can I spend it?’ I was thinking ‘Wow, here’s $60 to put towards my student loan payments!’“

3 – Don’t Wait to Give Your Dollars the Job of Debt Repayment

As soon as extra money enters your life, make them part of your debt repayment plan! Don’t let those dollars linger in your bank account. Not only will giving every dollar a job (YNAB’s Rule #1) prevent you from spending it on an impulse purchase, it’ll keep you motivated when you see the amount you owe drop like it’s hot.

Ernie said, “Every time I sent another payment, no matter how big or small, it felt like a huge win for me. It also saved me from extending my repayment period. Most months I sent at least two payments to my student loan, and one month I had as many as six. That was awesome!”

Keep Your Eyes on the Prize

So far, his strategy is working. Ernie said, “I have about $1400 left to pay off, and I’m on track to do it! A singular focus and a commitment on how to spend my extra money made all the difference in the world.” If, like Ernie, there is lingering student loan debt you want out of your life for good, maybe his karate-chop strategy will work for you, too.

The Biden-Harris Administration’s Student Debt Relief Plan may have an impact on your loan payoff strategy, spark some questions, or motivate you to pay off debt even faster. If you need help navigating YNAB’s loan planner, drop into one of our free workshops! Our teachers—even Ernie himself—would be happy to answer your questions.

No matter which method you choose for your student loan repayment, it all starts with a budget. When you really need to tell your money where to go (i.e. toward paying off your student loans fast), it’ll save you lots of mental math around loan terms, student loan interest, due dates, and monthly payments…along with loads of stress. 

You know what they say: You Need a Budget. It comes with a nifty loan planner to help you pay off student loans fast, and it’s free for 34 days. Karate chop!

Learn more about how to make big budgeting wins with our Four Rules for Less Money Stress YouTube playlist