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Snowball Method versus Avalanche Method to Pay Down Student Loans?

Snowball versus Avalanche Comparison
Snowball versus Avalanche Debt Payoff

I Love Making Money Staff & writers

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Debt Snowball Method vs Debt Avalanche Method – Which Offers the Fastest Student Loan Payoff?

In our first part of this series, we talked about the top 6 ways to pay off student loans faster than making the minimum payments. While each strategy is effective, some work faster than others. In particular, the debt snowball and debt avalanche method work the fastest and are the most effective.

But which student loan reduction method is the most effective?

We help you understand the differences below.

A Recap of the Debt Snowball Method for Paying Off Student Loans

If you recall, the debt snowball method helps you have ‘small wins’ over time. You hit the lowest balance debt first with as much money as you can each month. Once you wipe that debt out, you keep creating the snowball by adding that payment to the next one in line, gaining even more momentum. You keep doing this until your debts are paid in full.

A Debt Snowball Example:

Let’s say you have five student loans in the amounts of

  • $4,500
  • $6,200
  • $8,500
  • $10,400
  • $12,600.

You’d make the minimum required payment for each loan. But, you’d pay extra toward the $4,500 loan. Pay as much as you can to pay the balance down faster. You’ll see the momentum as your balance drops each month.

Once you get that loan down to $0, you make that same payment PLUS the minimum required payment on the $6,200 loan, making headway on that loan. You keep the ball rolling until you are debt- free.

The Benefits of Debt Snowball Method

  • You are in control of how much extra you pay; there’s no requirement, but the more you pay the faster you get out of debt
  • You’ll see faster ‘wins’ when you focus on the smallest debt and the motivation may help drive you to keep going
  • You may feel more organized and in control of your debt with a plan in place

The Downsides:

  • It takes a while to get to the largest debt, which may feel deflating seeing that ‘large’ number just sitting there barely touched
  • You may pay more in interest over the life of the loans because you don’t take APRs into consideration

A Recap of the Debt Avalanche Method

The debt avalanche method focuses on the APR. This is where you spend your hard earned money. Rather than lining your debts up in order of balance, you order them highest to lowest APR, tackling the loan with the highest interest rate first.

You use the same method making the minimum payments toward each loan, but your ‘extra’ money goes toward the loan with the highest APR rather than the lowest balance.

A Debt Avalanche Method Example:

We’ll use the same loan amounts, but this time order them by APR.

List the loans from highest to lowest interest rate like this:

  • $10,400 (14%)
  • $6,200 (12.5%)
  • $12,600 (10%)
  • $4,500 (8%)
  • $8,500 (6%)

You’ll pay the minimum required payment for each loan every month. Any extra money you have you’ll pay toward the $10,400 loan. Keep doing this until you pay the balance off in full.

This will take longer than the debt snowball method, but you’ll pay much less interest this way. Keep going despite seeing slow progress.

After You Pay Off One Loan

Once the $10,400 loan is zeroed out, move onto the $6,200 loan making the same payments PLUS the required payment on that loan. Keep letting the avalanche fall until you are out of debt.

The Benefits of Debt Avalanche Method

  • You pay down the balances that create the most interest first, which leaves you paying less interest over the life of your loans
  • You may pay your loans off faster (an avalanche is much larger than a snowball)
  • You pay less in interest putting more money in your pocket.

The Downsides

  • It’s harder to see your progression, which can make it hard to stay motivated
  • Seeing large balances just sitting there can be stressful

Which Method is Better for Fast Student Loan Payoff?

Ideally, the debt avalanche works best if you look at the big picture. You pay much less interest by tackling the loan with the highest APR first. With the high interest rate out of the way, you have more money to hit your loans with lower interest rates. The more money you pay toward the loans with lower interest rates, the more principal you pay off.

Questions to Determine Whether to Use Debt Snowball versus Debt Avalanche Method

If you thrive on motivation and small wins, though, the debt snowball method may be better for you. Sit down and ask yourself the following questions:

  • Do you need small wins to keep going? If yes, choose the debt snowball.
  • Does paying high interest rates bother you? If yes, choose the debt avalanche.
  • Do you feel lost when trying to figure out which student loan to focus on first? Either option would work to help with this.
  • Do you want to get out of student loan debt as fast as possible? If so, choose the debt avalanche.
  • Do you have patience and can look at the ‘big picture’ rather than focusing on immediate gains? If so, choose the debt avalanche.

In Conclusion

If you need more money in your pocket, consider a side hustle that will help make more money. Also, check out these freelance jobs that you can do on the side to put more money towards your student loan debt.

Overall, the debt avalanche will provide you with the most savings. If you need quick wins in order to get yourself going, start with the debt snowball. As you make progress and maybe even pay off one loan, switch over to the debt avalanche. You’ll see even greater wins if you have patience and let the plan do its work.


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