You Will Be Financially Secure

[Cello]

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[ILLchief]

 

[Ferneezy]

totally different thought process from my side of the playground. i'm not becoming a slave to anything. my upcoming dental school debt is an investment into a future of near limitless potential, and i'm not talking about just building up a thriving dental practice (or three).

otherwise, strong write-up. the lion's share of us will be living the first scenario which is why it's so often stressed here to a) choose the cheapest school you get into, and 2) choose wisely where you initially practice right after school. those first few years on our own as practitioners are probably the most critical of our careers.

 

[y3nd0]

Great post!

I hope that the numbers above demonstrate why dentists are not poor, and why you will be able to pay back your loans and live a good live eventually so long as the dental industry doesn’t change for the worse and schools don’t become 100% more expensive in the next five years or so.

But unfortunately for some, dental school WILL be 100% more expensive than the $200,000 you have proposed.

 

[Cello]

Very true y3nd0, that's why it's so important not to be deceived by the "you'll be earning six figures and can pay back any loan!" hype that's tossed around by some schools. That said, it's still doable, but it will obviously take more time to pay back $400,000 than $200,000. In fact, unless you're paying down some serious dough (around $40,000 per year!) on $400,000 at 6.8% and 7.9% (the 7.9% grad plus loan will dominate the 6.8% subsidized loan at this amount since subsidized loans cap out well before $200,000), you're likely still going to be accruing interest faster than you're paying down the loan. Also, when I said that things will become an issue with tuition increases of 100%, I was actually referring more to the $350,000+ borrowers than the $200,000 or less crowd.

@Ferneezy, Yeah, I italicized and quoted the word 'slave' to reflect the fact that being a slave is all a matter of perspective. Having worked a low-wage job through college, then kept it out of college during the recession, I don't view any of our options as a form of slavery but serious opportunities. Dentistry is a great field.

 

[Illfavor]

I wish salaries were reported as median incomes, not mean. I want to know what the median associate income is. From what I've read, that number is around $120,000, but it varies widely. Obviously if you're willing to work in high demand areas, your alray will generally increase. Major cities are overrated.

Also, there are loan repayment options. Right now, they are generally 90-110k salary plus 20-30k in repayment. This should help ease the minds a little of those who will be in the $400,000 debt range just a little. You'll still be a slave, but there are some options.

And finally, live below your means. Pay off the debt, save, and live like a poor person because that's what you are. Commit to it.

Also, about the interest rates, aren't they lower now?

 

[LFA20]

amazing post but aren't most people in the hole for more than 200k?

 

[Luna724]

Very nice summary. Specifically, your comments on the military option very much summed up my understanding of the HPSP program. One thing I would like to add is that if you do HPSP, you don't have to be in the "top" of the class in order to specialize, meaning there is a little more breathing room if you are considering about specializing (besides AEGD or GPR).

 

[Ferneezy]

@Ferneezy, Yeah, I italicized and quoted the word 'slave' to reflect the fact that being a slave is all a matter of perspective. Having worked a low-wage job through college, then kept it out of college during the recession, I don't view any of our options as a form of slavery but serious opportunities. Dentistry is a great field.

no worries, just a little distinction i felt like making against an otherwise great post. i think it would behoove every pre-dent in this joint to browse the dentaltown forums, especially when they're in the "picking a school" phase. there is so much knowledge being dropped there it's unreal.

I wish salaries were reported as median incomes, not mean. I want to know what the median associate income is. From what I've read, that number is around $120,000, but it varies widely. Obviously if you're willing to work in high demand areas, your alray will generally increase. Major cities are overrated.

Also, there are loan repayment options. Right now, they are generally 90-110k salary plus 20-30k in repayment. This should help ease the minds a little of those who will be in the $400,000 debt range just a little. You'll still be a slave, but there are some options.

And finally, live below your means. Pay off the debt, save, and live like a poor person because that's what you are. Commit to it.

Also, about the interest rates, aren't they lower now?

agreed on median vs mean. mean is too greatly influenced by outliers to be of relevance for our (initial) needs.

don't forget the NHSC option (akin to military scholarships but with a bit more flexibility). i think it tends to get overlooked because so few are awarded to nascent dentists each year.

i believe interest rates are lower now...but they're variable. class of 2018 (and forward) will be playing slots with our finances every year we're in school. awesome.

 

[LaughingGas]

I was anticipating to go 400k debt w or w/o interest.

 

[arlmay]

I wish salaries were reported as median incomes, not mean. I want to know what the median associate income is. From what I've read, that number is around $120,000, but it varies widely. Obviously if you're willing to work in high demand areas, your alray will generally increase. Major cities are overrated.

Also, there are loan repayment options. Right now, they are generally 90-110k salary plus 20-30k in repayment. This should help ease the minds a little of those who will be in the $400,000 debt range just a little. You'll still be a slave, but there are some options.

And finally, live below your means. Pay off the debt, save, and live like a poor person because that's what you are. Commit to it.

Also, about the interest rates, aren't they lower now?

The rates are now 5.41% for direct unsubsidized loans and 6.41% for grad plus loans. So a little better than previously but not much

 

[TheWeeIceMan]

I'm not a pre-dent, but that's a solid write up. Well done Cello. I'd also throw in a little section on IBR/PAYE/PSLF, which will become prevalent with our generation of borrowers (well, maybe, assuming the feds don't cut it).

 

[NMC2010]

Out of curiosity, have any of you considered dentistry in Alaska after dental school? I've heard folklore that associates there can make 300k+ straight out of dental school because the demand is so high (even more if not an associate). Pretty much every job there pays more, like 100k/year as a middle school teacher or 300k/year as a pharmacist (these were offers family & friends considered). Most people aren't willing to do that though. If you're looking for ways to pay debt, this might be one way to sacrifice for a few years and get it all wiped out.

I'm doing the military route, so doesn't apply to me right now unless I want a comfortable nest egg after the military. Given that I'll be 30 years old by that point, I might want to just settle though.

 

[LaughingGas]

Out of curiosity, have any of you considered dentistry in Alaska after dental school? I've heard folklore that associates there can make 300k+ straight out of dental school because the demand is so high (even more if not an associate). Pretty much every job there pays more, like 100k/year as a middle school teacher or 300k/year as a pharmacist (these were offers family & friends considered). Most people aren't willing to do that though. If you're looking for ways to pay debt, this might be one way to sacrifice for a few years and get it all wiped out.

I'm doing the military route, so doesn't apply to me right now unless I want a comfortable nest egg after the military. Given that I'll be 30 years old by that point, I might want to just settle though.

Can't live solely from ice-fishing..

 

[NMC2010]

Can't live solely from ice-fishing..

Ha, my dad would argue with you on that one for sure. He just made tea out of pine needles and recently learned how to leech the acid out of acorns to safely make them into flour... and had me get him a "Lard" cookbook for Christmas haha. If he didn't have his family here, he'd move up to Alaska in a heartbeat and fish + hunt and probably be a mountain man to survive

This would be my dad:

 

[y3nd0]

Ha, my dad would argue with you on that one for sure. He just made tea out of pine needles and recently learned how to leech the acid out of acorns to safely make them into flour... and had me get him a "Lard" cookbook for Christmas haha. If he didn't have his family here, he'd move up to Alaska in a heartbeat and fish + hunt and probably be a mountain man to survive

Your dad... sounds amazing!

 

[LaughingGas]

NMC, maybe your dad should do a new survival tv show

 

[NMC2010]

Oh man, he'd be in his element. To him, that would be making a living by living his dream. If he had his own show, I'd almost strongly consider ditching dental school and joining him lol. We used to go on hunting trips together every year from the time I was 10 - 17, had a lot of fun. But alas, I'm partial to warmth, a comfortable bed, electricity... and eventually a wife. And besides, he would need me as a dentist to help him get that tree bark out of his teeth for when he runs out of sinew to use as floss

 

[gn4]

Out of curiosity, have any of you considered dentistry in Alaska after dental school? I've heard folklore that associates there can make 300k+ straight out of dental school because the demand is so high (even more if not an associate). Pretty much every job there pays more, like 100k/year as a middle school teacher or 300k/year as a pharmacist (these were offers family & friends considered). Most people aren't willing to do that though. If you're looking for ways to pay debt, this might be one way to sacrifice for a few years and get it all wiped out.

I'm doing the military route, so doesn't apply to me right now unless I want a comfortable nest egg after the military. Given that I'll be 30 years old by that point, I might want to just settle though.

Alaska is actually not bad. haha. I have some family in Fairbanks and it is pretty there

 

[Glimmer1991]

There is also the potential that a spouse's income can really help, but that variable is hard to account for. I know that for me personally, it will help immensely.
I am convinced that this is still a very lucrative career for people who have a bit of common sense. Furthermore, dentists don't work terribly long hours (unless they want to), and the field isn't as high stress as other medical fields. I can't complain.

 

[Dr. Dai Phan]

Greetings,

With tuition of DS reaching an average of 250K plus living expenses, you will be 300K in debt when you graduate. If you do residency that pays, the stipent is barely enough for you to live on leave alone trying to pay some of your debt. The quickest way to pay off the loan is to have a thriving practice and live frugally for at least 5 years. Although I have a very comfortable life now, I wish I had started to repay my loan much sooner than I did. That is why I tell people to minimize the debt as much as you can and forget about Ivy League status. The extra cost is not worth it in my opinion. DP

 

[ktran17]

Unfortunately Dp, costs have sky rocketed for many other private schools to the point that 2 out of 3 of the ivy leagues are considered relatively cheap compared to the newer private schools :/

 

[Apollonia]

There is also the potential that a spouse's income can really help, but that variable is hard to account for. I know that for me personally, it will help immensely.
I am convinced that this is still a very lucrative career for people who have a bit of common sense. Furthermore, dentists don't work terribly long hours (unless they want to), and the field isn't as high stress as other medical fields. I can't complain.

Good point about having a spouse that can help you out, if possible. I estimate to have ~$300K in debt by the time I graduate. My fiancee is a M.D. with almost no debt and so he's willing to get rid of half of my debt when I graduate. Even so, it will take me a good 8-10 yrs. to pay off the rest, depending on what the interest rates will be.

 

[Maka]

Solid financial break down. On the military side of things, if you do a shorter scholarship and have some loans (DS or college), the service member's relief act will lower the interest rate to a maximum of 6%.

 

[NDPitch]

Did you forget to include purchasing a home, which most people see as something that's "required"? The math gets a little hairy when you have fresh grads thinking they're now rich doctors and they want the 500-700k McMansion in the suburbs. Show me my 900/month 1 bedroom apartment.

 

[Ostertag]

How much can one expect to pay in different types of insurance? Which are completely necessary as an associate and/or owner?
(Malpractice...Disability...Health...Life...???)

 

[Illfavor]

Did you forget to include purchasing a home, which most people see as something that's "required"? The math gets a little hairy when you have fresh grads thinking they're now rich doctors and they want the 500-700k McMansion in the suburbs. Show me my 900/month 1 bedroom apartment.

Yea, $900 will get you 1,000 sqft 2bed/2bath where I'm from, but I have the same idea.

 

[Ferneezy]

Yea, $900 will get you 1,000 sqft 2bed/2bath where I'm from, but I have the same idea.

a 400sqft box here.

 

[Illfavor]

a 400sqft box here.

Wut...

 

[Ferneezy]

Wut...

srs. manhattan real estate prices without actually living in manhattan.

brilliant!

 

[AFlo1770]

very good job with financially planning your future. Realistic and straight-forward. I think it would be beneficial to look at the length of time it takes to pay off 200,000 when you steadily increase the amount you put towards your loans. If you decided to live like a "dental student" for 5 additional years, which means living off ~40,000, you could potentially pay back your loans within 5 years.

 

[Dent001]

wow this is a really great post. Theres ANOTHER OPTION TOO. Look up the income-based loan repayment programs. I would love to see an in-depth analysis of that on here. For those of you who dont know, this allows you to pay 15% of your discretionary income towards your loan per year. You do this for 20 years and regardless of how high the debt has totaled to at the end of 20 years you pay only the tax on whats remaining and the rest gets FORGIVEN TOTALLY. If the payment per year is actually lower than the minimum your "suppose" to pay. the difference gets added to the principal, but at the end you still only pay the tax on whats left.

Do the research and talk to an accountant that specializes in finances for Doctors on exactly this type of program and how to keep discretionary income low. K1 accounts can be a good tool too, but thats come down to negotiation between you and who you work for.

this isnt some magic program to completely gets rid of your debt, but it provides a route to pay off your loans without having to live like a college student for half your life. in the end you still pay the amount you borrowed initially and then some. A lot of people aren't going to end up with 300k in loans, in reality it turns out to be 360-400k when you go to a private school and need loans for cost of living also. this type of debt is really hard to even make the minimum payments even if you follow option #1 from the OPs post. Income based repayment allows a better route for debt this high.

there is a lot more to this than what i just wrote, feel free to critique

 

[Dent001]

1 more thing. It is possible to make a lot of money coming out of school. it all comes down to what kind of practice you join. a buddy of mine made a little over 200k after his first year. this isnt typical tho and he is very good at his job

 

[doc toothache]

This is certainly a very well written post, although by year 7, it appears that the bottle of ink was getting dry. The $40k income for a GPR is reasonable; the AEGD, on the other hand, will command roughly half that amount. Using your figures, while it is possible to pay off a 15 year loan in half the time by increasing payments to 60K a year, as you suggested, the wisdom of accelerating the payments in the last few years of the loan when a small percentage of the monthly payment goes toward the interest, may be questionable. Needless to say, increasing the payments by 40K may not be particularly realistic, since around the 7 year mark, additional loans are likely to crop up. The white picket fence around the fence will likely set one back 300-500K, while a practice, without the building, will likely to add an additional cool mil, to say nothing of buying and feeding Fido. And, oh, the Ferrari.

http://www.ada.org/sections/professionalResources/pdfs/survey_advanced_ed.pdf

There is also the potential that a spouse's income can really help, but that variable is hard to account for. I know that for me personally, it will help immensely.
I am convinced that this is still a very lucrative career for people who have a bit of common sense. Furthermore, dentists don't work terribly long hours (unless they want to), and the field isn't as high stress as other medical fields. I can't complain.

The spouse in question is likely to come with his/her own baggage, not to mention that "Cinderella" may wish to use the additional income on the castle he/she was promised when he/she said the "yes" and "I do". After all, the spouse did marry a "doctor".

 

[Cello]

@Dent001 Good question! I went ahead and applied my understanding (which is admittedly limited) of IBR to a basic Excel doc and came up with the following:

Assuming a $300,000 loan (to reflect what most of you seem to be saying in this thread) at the current 5.41% interest rate (I didn't account for the more expensive Grad PLUS portion once you've maxed the lower interest rate loans, so keep that in mind) and an income starting at $100,000 and increasing to $230,000 over 25 years, I found the following:

At the 25 year mark you would owe ~$21,600. To see the incomes I estimated take a gander at the attached Excel sheet.

Assuming a $230,000 income at this point, and an additional income of $21,600 for the year you're now making $251,600 that year which means the 33% tax bracket.

Your total tax on just the remainder of the loan is about $8,208. Remember that we're not including your income taxes or any other taxes you are liable for that year!

For those of you looking at loans in excess of $400,000. I went ahead and applied the same Excel formulas to a principal amount of $400,000 and... well... it isn't pretty!

Assuming that the incomes I supplied mirror reality, or at least aren't completely bogus, you will ABSOLUTELY NOT pay your loan off in 20 years...

In fact, by the end of the 25 year loan period your remaining balance is $394,889 because you don't pay down the principal at all until the 25th year! You owe $156,376 in taxes on just the loan!!!

Not only that, but according to the IRS you earned that $394,889 in addition to your $200,000 salary bringing you to $594,889 that year! Just a cursory look at this tells me that you will be paying the federal government $235,506 that year (not accounting for deductions) on a $200,000 salary married or not. That is $235k in addition to the 15% you have been forking over every year for two and a half decades! OUCH!!!

Now, take into account inflation, a possible residency, the possibility of buying into a practice, my generous assumption that you received (impossibly) the best available interest rate of 5.41% for the entire $400,000 loan, and also the fact that neither IBR nor PAYE apply to anything that isn't a federal loan (so most of the $400,000 debt you've accrued) and well, I'm feeling the pressure for anyone who finds themselves in this situation!

Unless you're planning to make a lot of money straight out of dental school, you probably should not consider IBR with a debt in excess of $300,000....

**You can change some values and play around with the attached Excel doc, but be sure you understand how I set it up because it wasn't created to be easily manipulated (it took around five to ten minutes to make for this thread). To change from $400,000 to $300,000 for instance, you can just change cell B2 to 300000.**

PAYE seems like a much better option because the repayment rate is 10% of your income. However, if you do the numbers in the Excel sheet and change the repayment rate from 15% (for IBR) to 10% (for PAYE) you find that you'll owe $391,000 at the twenty year mark with a $300,000 loan which means you will be paying a 39.6% income tax rate and hurting pretty sorely that year.

Keep in mind also that the 20 or 25 years which you are carrying a huge and growing or slowly decreasing sum of debt you are going to find it more difficult to finance a home, cars, and even a dental practice.

EDIT: Just remembered that IBR is a 25 year period while PAYE is 20 years. Fixing now...

EDIT 2: I fixed the Excel sheet and this post so that the numbers should be more accurate now. Although the 25 year IBR thing doesn't hit as hard as it did at 20 years, it's telling to note that because you are paying out 15% of your income five years longer than you would have with my original calculations, it works out that you pay more in loan payments those last five years than you would have paid in taxes at 20 (more than $150,000 in loan repayments as opposed to a little more than $50,000 in taxes at 20 years which is a strong indicator that paying the loans off ASAP is much better than paying 10% or 15% for 20 - 25 years).

@NDPitch I left that up to everyone to work out from the remainder of the net salary that didn't go towards loan repayment.

@doc toothache, The seven year mark is about the time my wife walked in and demanded to know why I wasn't working towards that castle! *Rimshot*

 

[b0bmarley]

a 400sqft box here.

oh you fancy huh? not

 

[Dent001]

did you account that you pay 15% of you Discretionary income or just 15% of your total income for the year? theres a big difference

 

[Faux]

I actually tend to hear the opposite about the military regarding hand skills getting up to speed. One of the reasons why I'm very hesitant about it. Also forgot to mention those scholarships that require you to live in a particular area.

fort polk la posted this the other day
I have worked at fort gordan and fort polk... Fort gordan is terrible because everything is referred out to specialties. Amalgam mill is all thats left and exams. I have 2 year gpr and 25 yesrs practice under my belt. I thought this avenue would be a nice way to give back since my retirement and to support our soldiers . I was terribly wrong!!!!! You young docs just graduating beware

 

[Luna724]

I actually tend to hear the opposite about the military regarding hand skills getting up to speed. One of the reasons why I'm very hesitant about it. Also forgot to mention those scholarships that require you to live in a particular area.

fort polk la posted this the other day
I have worked at fort gordan and fort polk... Fort gordan is terrible because everything is referred out to specialties. Amalgam mill is all thats left and exams. I have 2 year gpr and 25 yesrs practice under my belt. I thought this avenue would be a nice way to give back since my retirement and to support our soldiers . I was terribly wrong!!!!! You young docs just graduating beware

Just out of curiosity, what was your opinion on deciding on GPR over the other specialty programs through the military?

 

[Apollonia]

@ Cello,

What about consolidating loans after graduation? I know one can do this with federal loans. Some consolidation agreements will give you 1% back of what you originally consolidated if you pay on time for 4 yrs. and knock off 1% of the interest on top of that, but only once. And if you pay through direct deposit, they will take an additional 0.5% off the interest. I think this might be useful to some and I will look into it.

 

[chill45]

@ Cello,

What about consolidating loans after graduation? I know one can do this with federal loans. Some consolidation agreements will give you 1% back of what you originally consolidated if you pay on time for 4 yrs. and knock off 1% of the interest on top of that, but only once. And if you pay through direct deposit, they will take an additional 0.5% off the interest. I think this might be useful to some and I will look into it.

Keep us updated on what you find. Maybe start a new thread so it would be easier to discuss and get more info on this topic and not have to dig through it with

 

[Cello]

did you account that you pay 15% of you Discretionary income or just 15% of your total income for the year? theres a big difference

I wasn't aware of that. I'm going to fix up the spreadsheet and make a separate thread for IBR and PAYE. I also just read that even if your 15% payment fails to pay the interest in full that the government pays the rest.

 

[Flying Snow]

Below I go over the major three paths to financial security as a dentist, and why dentistry is still a very lucrative and secure profession if you don't make a lot of mistakes (like staying home to take care of your children your first year out of dental school).

Dental School Average Tuition: ~$200,000 (according to stats recorded through 2010)

Non-Military / Non-PhD Path:

· In the hole ~$200,000 ($160,000 @ 6.8% and $40,000 @ 7.9%)

· If you pursue AEGD or GPR and are not granted a loan deferment then assume ~$40,000 income for the GPR or ~$20,000 for an AEGD [thanks doc toothache] (allowing for little or no payback of loan) and therefore your loan becomes ~$214,000 at the end of residency if you pay nothing towards it (see how quickly it adds up?).

· If you manage to secure an associate position, you can expect to make between $90,000 and $110,000 (we’ll say $100,000) from what I keep seeing on these forums. Depending on your tax bracket you will either pay $28,000 if you’re single (28%), or $25,000 if you’re married filing jointly (25%). Now, state income tax depends entirely upon where you live (some states have no state income at all). We’ll assume 8%, which is on the ‘upper’ end of the spectrum for state income. That means that if you are single, you are paying $36,000 of your total income to state and federal income tax.

This effectively leaves you with $62,000 of your income as an associate to pay back your student loans, eat, keep a roof over your head, drive a car, etc. Now, as we saw in the previous bullet point, your loan increases by roughly $14,000 if you pay nothing on it. So, that means that just to keep our loan roughly where it’s at, $14,000 of what you pay is not really going towards the principal loan amount of $200,000. So, if you pay $20,000 (leaving you with $42,000 in net earnings to live on) towards your $200,000 loan, remember that the interest eats away ~$14,000 of the amount that you paid, meaning your principal really only went down by $6,000 that first year to roughly $194,000.

Each year that you pay $20,000 however will have a bigger impact because the principal loan is diminished and the interest on it is reduced. The second year for example your accrued interest is roughly $13,620. The following year even less, and eventually most of your hard-earned cash is going to pay for the principal amount. But, this shows why it often takes 20 years to pay back your loans! I am not accounting for the fact that you may make a full $2,500 tax reduction on your student loan interest if you earn $55,000 (single) or $110,000 (married). Also, you may make partial deductions up to $150,000. A $2,500 reduction to your taxes may not seem like a lot in the grand scheme of things, but it can make quite a difference when you extrapolate out ten or twenty years (the life of the loan).

· So, where does this leave us? Well, assuming that we pay $20,000 on our loan each year and ONLY $20,000 each year, we will take roughly 13 – 14 years to pay our loan back.

· Now, there’s some good news, with a bit of, well, mixed news. Because a dentist’s salary almost always increases during the span of the career. Now, BLS says that the average income for a general dentist is ~$141,000, but that doesn’t differentiate between associates, those working at corporate dental mills, and private dentists who own or are part owners of their practice. The ADA claims that general dentists who own part or all of their own practice make $192,680.

· Things become complicated here, because to make the leap from associate to part or full owner of a practice, you have to take out another loan... You have to be seen as a good risk to the lender before anyone will loan you the money, which means you must have good credit and likely will have had to pay down your loan significantly. I would like to say that five years out you’ll be making $150,000, but that depends entirely upon how quickly you build a patient base. The fact is, many dentists report net losses the first year running their own practice. By the fifth year, maybe they are making something between the BLS and ADA figures, we’ll say $175,000 for our purposes, but that could actually be 6, 7, or 8 years after dental school. If you do an AEGD or GPR, then associate for one or two years before buying into a practice, you are looking at a long period of time before you’re making the ‘big bucks’.

· The good news though, is that you will build equity on your practice if you own the building and/or property. Another bit of good news is that if you buy into an existing practice as a partner or take over from a retiring dentist, you won’t take as long to build a patient base. The second variable depends a bit upon good fortune as well as circumstances.

· So, now we’re seven years out of dental school we’ll say. We’ve been making our $20,000 annual student loan payments and worked the loan down to a more manageable ~$130,000 or so. Now we find ourselves making $175,000 which means we can pay more than $20,000 onto our loan. Now, we probably would have steadily increased the payback amount before this point anyway, but I’m laying out an easy and likely worst-case scenario. After taxes we are making $126,000 after federal taxes, and $112,000 after state taxes. We are now netting roughly $112,000 annually, which means we can even triple our loan repayment to $60,000 and still be earning $52,000 which is $10,000 more than we earned before. Our loan will be decimated at that repayment rate. But, we are still seven years in at this point…

Military Option:

· You start with a debt of $0 with the HPSP scholarship. Nothing to pay back except for four years of your life. Now, those four years are better than prison, but not by much if you’re used to a cushy lifestyle. You will earn a stipend during dental school of $2,157 which works out to $25,884 annually. So, not only are we not in the hole, but we have income DURING dental school to keep us from taking out loans for cost of living. Furthermore, most of your school fees are paid for.

· When you finish dental school, you payback your commitment for four years (still less than the seven years of less than desirable circumstances mentioned in the non-military option) and may be sent to such wonderful locations as… the desert. You will sleep on cots, learn how to be a leader (or so they say), and earn some decent benefits. You get roughly $75,000 averaged over the four years for captain’s pay. An additional $10,000 for dental officer pay brings us to $85,000 which is almost the lower end of an associate dentist’s salary. When you are in a combat zone your salary is tax-free and you get some (relatively small) combat bonus pay. You get BHA, and some retention bonuses (though these may increase your commitment to the military, so we will ignore them for now).

· Lots of dentists say that you will pretty much suck straight out of dental school because you have to develop speed and learn many things that can’t be taught in 4 years of DS on your own and with CE. So, many dentists seem to think that the military gives you a great opportunity to develop your skills as a dentist much like an associate would, or someone working at a dental mill would. Some people do their AEGD or GPR residency in the military which adds one year to their total commitment. I believe that this is paid for.

· All of that said, you have to decide if you’d rather be a corporate slave, a government slave, or another dentist’s slave and how long you can handle any of those scenarios. The military is four years, while corporate / associateships seem to average two. Straight out of the military (four or five years) you have $0 debt and are in a great position to purchase a practice. With the other two paths you still likely have significant debt at the end of seven years (unless you’re really good with finances AND willing to live cheaply) but are beginning to make some serious dough.

PhD Option:

· This is a great option if you want to work in academic dentistry. You have a commitment to your institution to get the free DS tuition, much like the military, but without the desert and roadside bombs. Many DDS/PhD and DMD/PhD programs offer a stipend of roughly $20,000 which is similar to the amount given by the military. If you’re really into research, can buckle down, and are lucky enough, you MAY finish your PhD in three years. But, chances are you’re looking at four or five which is also similar to the military.

· You come out of a DDS/PhD program with $0 in debt just like the military. You owe nothing to the government (except taxes), but you do owe the institution which paid your tuition. You will be in a great financial position to purchase a practice when you finish your DDS/PhD (if that’s really your intention with such a degree), but you have one big problem.

All of the time you spent at the lab bench earning your PhD though is time that you were not becoming a better dentist. So, while this option has roughly the same financial perks that the military does with the added incentive of having a PhD and being able to work in research or academics, you will not be as practiced at the art of dentistry as someone who went the military route. This is why it is absolutely essential that you decide whether you want to practice academic dentistry or dental research before pursing a DDS/PhD or DMD/PhD program.

In the end you have three options which are as follows:

1. Become a 'slave' to a lender and ultimately a 'slave' to a dental mill or older dentist for two years before buying into a practice.

2. Become a 'slave' to the US government for four years before buying into a practice.

3. Become a 'slave' to an academic institution for four years before getting an academic job or buying into a practice.

Unless you are independently wealthy or have rich parents, you will probably be someone’s slave for half a decade or more. Each option has some serious advantages and disadvantages to think about. The thing about slavery though, is that today’s version is much better than anything in centuries gone by. So, if I have to sacrifice five years of my life to be financially secure, I think it’s very worth it.

Two things before ending this post.

1. If you can poke holes in the info I’ve given above, please do so and let me know so that I can fix it.

2. I hope that the numbers above demonstrate why dentists are not poor, and why you will be able to pay back your loans and live a good live eventually so long as the dental industry doesn’t change for the worse and schools don’t become 100% more expensive in the next five years or so.

The only thing I take issue with your post is you are grossly exaggerating the Military (HPSP) scholarship. While I am not a recipient of a HPSP scholarship I am a Marine Corps veteran and have dealt with Navy Dental/Medical for 4 years and the lifestyle you portray is wrong. If anything medical professionals in the military have the cushiest lifestyle of them all. Not once have I seen a medical officer in a cot or in the desert more than likely they are at an air base or Landstuhl in Germany in an air-conditioned room eating the beat meals available and are far away from any combat scenario. This is why we have corpsman! No one thinking about the military should even worry about lifestyle or combat the only thing they should worry about is the culture shock because we do things differently than civilians do. With that said everything else was on the money, besides $0 debt is hard to beat for 4 years of basically doing nothing.

 

[THS]

Great post, cello. Thanks for sharing

 

[Daneosaurus]

The only thing I take issue with your post is you are grossly exaggerating the Military (HPSP) scholarship. While I am not a recipient of a HPSP scholarship I am a Marine Corps veteran and have dealt with Navy Dental/Medical for 4 years and the lifestyle you portray is wrong. If anything medical professionals in the military have the cushiest lifestyle of them all. Not once have I seen a medical officer in a cot or in the desert more than likely they are at an air base or Landstuhl in Germany in an air-conditioned room eating the beat meals available and are far away from any combat scenario. This is why we have corpsman! No one thinking about the military should even worry about lifestyle or combat the only thing they should worry about is the culture shock because we do things differently than civilians do. With that said everything else was on the money, besides $0 debt is hard to beat for 4 years of basically doing nothing.

Errr!!!

 

[Bis-GMA111]

Very nice summary. Specifically, your comments on the military option very much summed up my understanding of the HPSP program. One thing I would like to add is that if you do HPSP, you don't have to be in the "top" of the class in order to specialize, meaning there is a little more breathing room if you are considering about specializing (besides AEGD or GPR).

not true. it is dependent on the needs of the army/navy/af, yes, and strictly from a numbers standpoint--sure you stand a better chance at getting certain residencies (i.e. the numbers range, i.e. 11 people apply for ortho in a year, but 6 get it)--but you need to realize that the chances of you getting a competitive residency out of school for any branch really requires you to have solid grades. (btw the army has the most residency slots)

you're also competing with captains, majors, ltcs who have way more on their resumes than you do coming right out of dental school. if your grades aren't as competitive as they would be in the civilian world, why would they pick you over a senior officer?

grades don't come as much into play when you're in the military for a longer period of time, and have had time to build up a resume

 

[Bis-GMA111]

The only thing I take issue with your post is you are grossly exaggerating the Military (HPSP) scholarship. While I am not a recipient of a HPSP scholarship I am a Marine Corps veteran and have dealt with Navy Dental/Medical for 4 years and the lifestyle you portray is wrong. If anything medical professionals in the military have the cushiest lifestyle of them all. Not once have I seen a medical officer in a cot or in the desert more than likely they are at an air base or Landstuhl in Germany in an air-conditioned room eating the beat meals available and are far away from any combat scenario. This is why we have corpsman! No one thinking about the military should even worry about lifestyle or combat the only thing they should worry about is the culture shock because we do things differently than civilians do. With that said everything else was on the money, besides $0 debt is hard to beat for 4 years of basically doing nothing.

+1. although, i'd say that 'cushiest' is a relative term depending on the branch you're in, but yeah i'd agree..you're better off

 

[DentalFox]

Below I go over the major three paths to financial security as a dentist, and why dentistry is still a very lucrative and secure profession if you don't make a lot of mistakes (like staying home to take care of your children your first year out of dental school).

Dental School Average Tuition: ~$200,000 (according to stats recorded through 2010)

Non-Military / Non-PhD Path:

· In the hole ~$200,000 ($160,000 @ 6.8% and $40,000 @ 7.9%)

· If you pursue AEGD or GPR and are not granted a loan deferment then assume ~$40,000 income for the GPR or ~$20,000 for an AEGD [thanks doc toothache] (allowing for little or no payback of loan) and therefore your loan becomes ~$214,000 at the end of residency if you pay nothing towards it (see how quickly it adds up?).

· If you manage to secure an associate position, you can expect to make between $90,000 and $110,000 (we’ll say $100,000) from what I keep seeing on these forums. Depending on your tax bracket you will either pay $28,000 if you’re single (28%), or $25,000 if you’re married filing jointly (25%). Now, state income tax depends entirely upon where you live (some states have no state income at all). We’ll assume 8%, which is on the ‘upper’ end of the spectrum for state income. That means that if you are single, you are paying $36,000 of your total income to state and federal income tax.

This effectively leaves you with $62,000 of your income as an associate to pay back your student loans, eat, keep a roof over your head, drive a car, etc. Now, as we saw in the previous bullet point, your loan increases by roughly $14,000 if you pay nothing on it. So, that means that just to keep our loan roughly where it’s at, $14,000 of what you pay is not really going towards the principal loan amount of $200,000. So, if you pay $20,000 (leaving you with $42,000 in net earnings to live on) towards your $200,000 loan, remember that the interest eats away ~$14,000 of the amount that you paid, meaning your principal really only went down by $6,000 that first year to roughly $194,000.

Each year that you pay $20,000 however will have a bigger impact because the principal loan is diminished and the interest on it is reduced. The second year for example your accrued interest is roughly $13,620. The following year even less, and eventually most of your hard-earned cash is going to pay for the principal amount. But, this shows why it often takes 20 years to pay back your loans! I am not accounting for the fact that you may make a full $2,500 tax reduction on your student loan interest if you earn $55,000 (single) or $110,000 (married). Also, you may make partial deductions up to $150,000. A $2,500 reduction to your taxes may not seem like a lot in the grand scheme of things, but it can make quite a difference when you extrapolate out ten or twenty years (the life of the loan).

· So, where does this leave us? Well, assuming that we pay $20,000 on our loan each year and ONLY $20,000 each year, we will take roughly 13 – 14 years to pay our loan back.

· Now, there’s some good news, with a bit of, well, mixed news. Because a dentist’s salary almost always increases during the span of the career. Now, BLS says that the average income for a general dentist is ~$141,000, but that doesn’t differentiate between associates, those working at corporate dental mills, and private dentists who own or are part owners of their practice. The ADA claims that general dentists who own part or all of their own practice make $192,680.

· Things become complicated here, because to make the leap from associate to part or full owner of a practice, you have to take out another loan... You have to be seen as a good risk to the lender before anyone will loan you the money, which means you must have good credit and likely will have had to pay down your loan significantly. I would like to say that five years out you’ll be making $150,000, but that depends entirely upon how quickly you build a patient base. The fact is, many dentists report net losses the first year running their own practice. By the fifth year, maybe they are making something between the BLS and ADA figures, we’ll say $175,000 for our purposes, but that could actually be 6, 7, or 8 years after dental school. If you do an AEGD or GPR, then associate for one or two years before buying into a practice, you are looking at a long period of time before you’re making the ‘big bucks’.

· The good news though, is that you will build equity on your practice if you own the building and/or property. Another bit of good news is that if you buy into an existing practice as a partner or take over from a retiring dentist, you won’t take as long to build a patient base. The second variable depends a bit upon good fortune as well as circumstances.

· So, now we’re seven years out of dental school we’ll say. We’ve been making our $20,000 annual student loan payments and worked the loan down to a more manageable ~$130,000 or so. Now we find ourselves making $175,000 which means we can pay more than $20,000 onto our loan. Now, we probably would have steadily increased the payback amount before this point anyway, but I’m laying out an easy and likely worst-case scenario. After taxes we are making $126,000 after federal taxes, and $112,000 after state taxes. We are now netting roughly $112,000 annually, which means we can even triple our loan repayment to $60,000 and still be earning $52,000 which is $10,000 more than we earned before. Our loan will be decimated at that repayment rate. But, we are still seven years in at this point…

Military Option:

· You start with a debt of $0 with the HPSP scholarship. Nothing to pay back except for four years of your life. Now, those four years are better than prison, but not by much if you’re used to a cushy lifestyle. You will earn a stipend during dental school of $2,157 which works out to $25,884 annually. So, not only are we not in the hole, but we have income DURING dental school to keep us from taking out loans for cost of living. Furthermore, most of your school fees are paid for.

· When you finish dental school, you payback your commitment for four years (still less than the seven years of less than desirable circumstances mentioned in the non-military option) and may be sent to such wonderful locations as… the desert. You will sleep on cots, learn how to be a leader (or so they say), and earn some decent benefits. You get roughly $75,000 averaged over the four years for captain’s pay. An additional $10,000 for dental officer pay brings us to $85,000 which is almost the lower end of an associate dentist’s salary. When you are in a combat zone your salary is tax-free and you get some (relatively small) combat bonus pay. You get BHA, and some retention bonuses (though these may increase your commitment to the military, so we will ignore them for now).

· Lots of dentists say that you will pretty much suck straight out of dental school because you have to develop speed and learn many things that can’t be taught in 4 years of DS on your own and with CE. So, many dentists seem to think that the military gives you a great opportunity to develop your skills as a dentist much like an associate would, or someone working at a dental mill would. Some people do their AEGD or GPR residency in the military which adds one year to their total commitment. I believe that this is paid for.

· All of that said, you have to decide if you’d rather be a corporate slave, a government slave, or another dentist’s slave and how long you can handle any of those scenarios. The military is four years, while corporate / associateships seem to average two. Straight out of the military (four or five years) you have $0 debt and are in a great position to purchase a practice. With the other two paths you still likely have significant debt at the end of seven years (unless you’re really good with finances AND willing to live cheaply) but are beginning to make some serious dough.

PhD Option:

· This is a great option if you want to work in academic dentistry. You have a commitment to your institution to get the free DS tuition, much like the military, but without the desert and roadside bombs. Many DDS/PhD and DMD/PhD programs offer a stipend of roughly $20,000 which is similar to the amount given by the military. If you’re really into research, can buckle down, and are lucky enough, you MAY finish your PhD in three years. But, chances are you’re looking at four or five which is also similar to the military.

· You come out of a DDS/PhD program with $0 in debt just like the military. You owe nothing to the government (except taxes), but you do owe the institution which paid your tuition. You will be in a great financial position to purchase a practice when you finish your DDS/PhD (if that’s really your intention with such a degree), but you have one big problem.

All of the time you spent at the lab bench earning your PhD though is time that you were not becoming a better dentist. So, while this option has roughly the same financial perks that the military does with the added incentive of having a PhD and being able to work in research or academics, you will not be as practiced at the art of dentistry as someone who went the military route. This is why it is absolutely essential that you decide whether you want to practice academic dentistry or dental research before pursing a DDS/PhD or DMD/PhD program.

In the end you have three options which are as follows:

1. Become a 'slave' to a lender and ultimately a 'slave' to a dental mill or older dentist for two years before buying into a practice.

2. Become a 'slave' to the US government for four years before buying into a practice.

3. Become a 'slave' to an academic institution for four years before getting an academic job or buying into a practice.

Unless you are independently wealthy or have rich parents, you will probably be someone’s slave for half a decade or more. Each option has some serious advantages and disadvantages to think about. The thing about slavery though, is that today’s version is much better than anything in centuries gone by. So, if I have to sacrifice five years of my life to be financially secure, I think it’s very worth it.

Two things before ending this post.

1. If you can poke holes in the info I’ve given above, please do so and let me know so that I can fix it.

2. I hope that the numbers above demonstrate why dentists are not poor, and why you will be able to pay back your loans and live a good live eventually so long as the dental industry doesn’t change for the worse and schools don’t become 100% more expensive in the next five years or so.

It's actually 8 years of service in the military...

 

[DentalFox]

Greetings,

With tuition of DS reaching an average of 250K plus living expenses, you will be 300K in debt when you graduate. If you do residency that pays, the stipent is barely enough for you to live on leave alone trying to pay some of your debt. The quickest way to pay off the loan is to have a thriving practice and live frugally for at least 5 years. Although I have a very comfortable life now, I wish I had started to repay my loan much sooner than I did. That is why I tell people to minimize the debt as much as you can and forget about Ivy League status. The extra cost is not worth it in my opinion. DP

Can't we just raise the prices on procedures to adjust for the rise of tuition.

 

[Cello]

It's actually 8 years of service in the military...

Unless things have changed it is a year-for-year commitment. Dental school is four years, so you only owe the military four years. Where did you find that it has now changed to eight years?