A Dental School Education or a 2 bed/2 bath Miami Condo?

Nov 13, 2020
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Disclaimer: Before anyone gets too upset about this post, I write this all with tongue in cheek/somewhat sarcastically. Education is (usually) always a better investment than a vacation property. I just hope to help those discerning a career in dentistry with realistic expectations/ a plan to pay off student loan debt. Personally, I jumped into dental school without a care in the world about the debt load. Now, as a recent graduate, I wish I had known about plans and options beforehand.

So, with that said, the NYU College of Dentistry recently released it's estimates for a 4 year education at the institution. According to the website, it will soon cost over 700k to attend. If you don't take this cost seriously, please understand that even for dentists with eventual high income, this is a huge investment. While there are absolutely cheaper schools, dental school in general is very expensive.
student debt increase graph.PNG

nyu tuition.PNG

Just for comparison, you could buy this a Miami 2 bed/2 bath condo for about the same price...
miami picture.PNG

Again, this comparison is to just show how much money 700k really is.

Before you take out loans, know your options....
As the cost of dental school continues to increase, I would assume that most if not all borrowers will eventually participate in the Income-Driven Loan Repayment Plan (IDR).

This is a constantly evolving program that changes based on the administration that is currently in office and it sounds great, BUT there are some serious long term consequences that comes along with this program. Most importantly, the tax bomb at the end of payments.

Here's how it works:

  1. Most dental students that are eligible for the program will pay 10% of their discretionary income in monthly payments. This will significantly reduce monthly payments versus a standard plan.
  2. After 20 years of payments, your entire loan balance will be forgiven. GREAT! But, this is where the downside comes in.
  3. The forgiven amount of the loan will be taxed as income. So let's estimate...
  4. It's 20 years after dental school and you are in your peak earning years as a dentist. Let's say you are comfortably making 300k per year and are about to be hit with loan forgiveness.
  5. You took out 700k of dental school loans have payed off ~200k with the IDR plan. Huge relief that you get the rest forgiven right?? Well yes, but your taxable income is going to increase significantly.
  6. Conservatively (not including accrued interest over the 20 years) you have 500k worth of loans forgiven.
  7. So your taxable income will be 800k for the year (300k actual income plus 500k of forgiven loans)
  8. While this is still a better option than paying ~5,000 per month in loan payments for a standard plan, the IDR plan is also not all sunshine and rainbows.
I am not trying to scare anyone off from dentistry, but with increasing dental school cost we need to realize the true worth of this investment in education. Dental students need to understand that their debt to income ratio may be severely skewed coming out of school. According to recent ADA numbers, median income of new dental graduates is $130,000. On the IDR program, this would equate to $922 dollars worth of loan payments per month. Still not an inconsequential amount of money.

ADA4.PNG

The TL;DR:
Know your plan before taking out mindlessly taking out student loans. Set a budget, keep your other debts low as possible, etc. IDR plan is extremely valuable in helping students realize their dream of becoming a dentist, but there are also major disadvantages.
 
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Ivy.ch

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Go to state school and AirBnB that condo once a month and still pay less than NYU.
 
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Great post. I am incredibly grateful for SDN, straight up saved me from committing financial suicide. Its disgusting how common misconceptions about a dentist's income are. People literally think that dentists can tackle $500k+ debt in 5 years when in reality its more like 100 years lol.
 
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Great post. I am incredibly grateful for SDN, straight up saved me from committing financial suicide. Its disgusting how common misconceptions about a dentist's income are. People literally think that dentists can tackle $500k+ debt in 5 years when in reality its more like 100 years lol.
Thanks! A few more things that could be helpful.

IDR infographic without promotion.png IDR payment calculation with no publication.png
 

SirBrotherJam

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If 700k dental school is my only choice, I would rather use that money for investing and aim for 10% annual return.... and reapply to my state school next cycle or get another career :( I can't justify borrowing 500k+ for dental school. The max amount I am willing to spend is ~ 400k...
I agree with what you are saying here and indeed very good advice, but that is assuming you have 700k sitting around. Most probably don't so that argument is kinda moot.
 

SkinnyT

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Thanks for dumbing this concept down, makes it easier to understand. Yea, My goal is to go through this plan and use my hard earned income toward what really matters (family, living etc). Loans have become ridiculous at this point looking at how much debt we graduate with. But as I like to say, loans can last a lifetime, our lifetime on the other hand. I'd rather spend my lifetime making small payments on a seemingly never ending loan than to sacrifice most of my hard earned money to pay off something that will last so long and waste my life time doing so. When the TAX bomb comes Ill probably post pone that too :laugh: I want to live my 30s,40s,50s etc enjoying with my family and rewarding myself for all the hard work, not trying to pay off my loans quick. Paying loans is important yes, but don't miss out on life - It goes in a ;) of an eye so don't let the loan-monster take that away from you! Hey to each their own, just my 2 cents.
 
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Thanks! A few more things that could be helpful.

View attachment 334356 View attachment 334357
Thanks man, luckily I've just managed to get my debt down considerably by getting into a cheaper school that is close to home.
But can you explain your profile pic lmao?? I'm sure its a joke, but it looks legit and I will cry if dental school becomes a joke like that. What does a man gotta do nowadays to get a stable career that doesn't go down the gutter as soon as he starts? 😩
 
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FYI that chart you posted of NYU costing $700k is not "NYU releasing its estimates for four years" like you said. That was from a student loan financial advisor on here who markedly inflated and exaggerated the costs so that he could make a sensationalist post.
 
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FYI that chart you posted of NYU costing $700k is not "NYU releasing its estimates for four years" like you said. That was from a student loan financial advisor on here who markedly inflated and exaggerated the costs so that he could make a sensationalist post.
you're not gonna be able to pay off $600k that much more easily
 
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If 700k dental school is my only choice, I would rather use that money for investing and aim for 10% annual return.... and reapply to my state school next cycle or get another career :( I can't justify borrowing 500k+ for dental school. The max amount I am willing to spend is ~ 400k...
Where is the line drawn? So youre willing to spend 400k, but if a school which costs say 550k (above your limit) accepts you, youd rather reapply? And lose a year of dentist income? Which btw will average out to way more than 150k by the end of your career.
 
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I am not planning to attend any school that costs above 400k+ (based on estimated COA posted on school's website) even if that's my only option. Tbh, 400k is still too expensive, but I am willing to spend that amount of money because I like the career and my parents will pay up to ~100k a year for my education. I don't have any personal debt and I have ~30k in my own investment account. If I had to borrow 400k for dental school, I would have chosen another career path.

I personally think losing a year of dentist income (150k) & reapplying next year is better than accumulating additional 150k debt (+ interest) by going to more expensive school. Also, 150k income is not a lot when you are in a higher tax bracket & have astronomical student loans. I don't want to work like a horse and spend 20-30 years of my life living on rices and beans just to repay my student loans...

Borrowing ~550k (+ compounding interest) to become a dentist just doesn't make sense to me (but that's just my personal opinion)...
I sympathize with most of your post and I largely agree with you except on one point. 150k as dentists income should only be the case in the beginning of your career. when you average out your income, and consider youre losing a year of average income throughout your career, that decision to reapply makes a lot less sense IMO. Then again, if I expected to cap out at an average of 150k/year income throughout the length of my career, I would certainly never take even 400k in loans.
 

2thDoc11

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I'm a ND resident and don't have a state school. We are offered a opportunity to apply for a WICHE scholarship but there's only a handful of students who get it. I'm headed to Creighton in the fall and that's about $425k over the 4 years. Might get some help from the parents which will bring it down to $350k though.. Hoping that if I head back to ND and work hard, I'll be okay
 
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Big Time Hoosier

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Straight from NYU:


View attachment 334398 View attachment 334399

$140,000 x 4 + origination fees, accrued interest, and annual tuition increases = $700,000

Big Hoss
140x 4 is 560,000. 40k is already a stretch for living expenses. Even still from 560 to 700 is a stretch. You could argue similarly about any school. "Oh the CoA is 400,000? actually its 600,000 because of accrued interest and etc"
 

Big Time Hoosier

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140x 4 is 560,000. 40k is already a stretch for living expenses. Even still from 560 to 700 is a stretch. You could argue similarly about any school. "Oh the CoA is 400,000? actually its 600,000 because of accrued interest and etc"
To put the argument to rest, go to NYU on full loans and then post your loan balance when you’re done.

Think you have a plan to pay even $500,000 off in a timely manner?

2152DC41-6D5A-464E-83F1-28BC845336C3.jpeg

Big Hoss
 
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Is the IDR plan a smart way to go? I feel like I've seen people comment on both sides. Some saying its a terrible financial move and that you should just work your butt off while living like a resident for a few years to pay of the loans back.
Pros and cons with everything.
Pros. 1) Smaller payments 2) Eventual loan forgiveness (as of now)
Cons 1) Tax bomb 2) You are making loan payments for 20 years. 3) Whole bunch of interest accrual 4) yearly paperwork (AKA recertification in technical terms) 5) Legislative change could alter the program
140x 4 is 560,000. 40k is already a stretch for living expenses. Even still from 560 to 700 is a stretch. You could argue similarly about any school. "Oh the CoA is 400,000? actually its 600,000 because of accrued interest and etc"
Not every dental school is in Manhattan. Way easier to live on a student budget at other schools.
Thanks for dumbing this concept down, makes it easier to understand. Yea, My goal is to go through this plan and use my hard earned income toward what really matters (family, living etc). Loans have become ridiculous at this point looking at how much debt we graduate with. But as I like to say, loans can last a lifetime, our lifetime on the other hand. I'd rather spend my lifetime making small payments on a seemingly never ending loan than to sacrifice most of my hard earned money to pay off something that will last so long and waste my life time doing so. When the TAX bomb comes Ill probably post pone that too :laugh: I want to live my 30s,40s,50s etc enjoying with my family and rewarding myself for all the hard work, not trying to pay off my loans quick. Paying loans is important yes, but don't miss out on life - It goes in a ;) of an eye so don't let the loan-monster take that away from you! Hey to each their own, just my 2 cents.
1) I'm not sure if you are kidding about postponing paying taxes? I think you are?

2) Yes absolutely. That's what really matters. BUT, that doesn't go to say that the IDR plan has no impact on others around you.

Scenario: You crush it right out of school and make $200,000 (above the most recent figures from the ADA for first year dentists). Let's say you are married and your spouse makes $100,000 (also included in the IDR calculation). So for that $300,000 in total income, your take home pay after taxes will be about $210,000.

Your IDR payment will be ~$28,000 for your first year out. As you said, this is hard earned money. I wouldn't consider this a "small" payment. It's still significant. It's not enjoyable to have at least $28,000 taken out of your paycheck (in my proposed scenario) every year until your kids may be headed off to college
 

SkinnyT

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1) I'm not sure if you are kidding about postponing paying taxes? I think you are?

2) Yes absolutely. That's what really matters. BUT, that doesn't go to say that the IDR plan has no impact on others around you.

Scenario: You crush it right out of school and make $200,000 (above the most recent figures from the ADA for first year dentists). Let's say you are married and your spouse makes $100,000 (also included in the IDR calculation). So for that $300,000 in total income, your take home pay after taxes will be about $210,000.

Your IDR payment will be ~$28,000 for your first year out. As you said, this is hard earned money. I wouldn't consider this a "small" payment. It's still significant. It's not enjoyable to have at least $28,000 taken out of your paycheck (in my proposed scenario) every year until your kids may be headed off to college
Something to think about. To each their own :shifty:
 
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Disclaimer: Before anyone gets too upset about this post, I write this all with tongue in cheek/somewhat sarcastically. Education is (usually) always a better investment than a vacation property. I just hope to help those discerning a career in dentistry with realistic expectations/ a plan to pay off student loan debt. Personally, I jumped into dental school without a care in the world about the debt load. Now, as a recent graduate, I wish I had known about plans and options beforehand.

So, with that said, the NYU College of Dentistry recently released it's estimates for a 4 year education at the institution. According to the website, it will soon cost over 700k to attend. If you don't take this cost seriously, please understand that even for dentists with eventual high income, this is a huge investment. While there are absolutely cheaper schools, dental school in general is very expensive.
View attachment 334071

View attachment 334067

Just for comparison, you could buy this a Miami 2 bed/2 bath condo for about the same price...
View attachment 334070

Again, this comparison is to just show how much money 700k really is.

Before you take out loans, know your options....
As the cost of dental school continues to increase, I would assume that most if not all borrowers will eventually participate in the Income-Driven Loan Repayment Plan (IDR).

This is a constantly evolving program that changes based on the administration that is currently in office and it sounds great, BUT there are some serious long term consequences that comes along with this program. Most importantly, the tax bomb at the end of payments.

Here's how it works:

  1. Most dental students that are eligible for the program will pay 10% of their discretionary income in monthly payments. This will significantly reduce monthly payments versus a standard plan.
  2. After 20 years of payments, your entire loan balance will be forgiven. GREAT! But, this is where the downside comes in.
  3. The forgiven amount of the loan will be taxed as income. So let's estimate...
  4. It's 20 years after dental school and you are in your peak earning years as a dentist. Let's say you are comfortably making 300k per year and are about to be hit with loan forgiveness.
  5. You took out 700k of dental school loans have payed off ~200k with the IDR plan. Huge relief that you get the rest forgiven right?? Well yes, but your taxable income is going to increase significantly.
  6. Conservatively (not including accrued interest over the 20 years) you have 500k worth of loans forgiven.
  7. So your taxable income will be 800k for the year (300k actual income plus 500k of forgiven loans)
  8. While this is still a better option than paying ~5,000 per month in loan payments for a standard plan, the IDR plan is also not all sunshine and rainbows.
I am not trying to scare anyone off from dentistry, but with increasing dental school cost we need to realize the true worth of this investment in education. Dental students need to understand that their debt to income ratio may be severely skewed coming out of school. According to recent ADA numbers, median income of new dental graduates is $130,000. On the IDR program, this would equate to $922 dollars worth of loan payments per month. Still not an inconsequential amount of money.

View attachment 334072

The TL;DR:
Know your plan before taking out mindlessly taking out student loans. Set a budget, keep your other debts low as possible, etc. IDR plan is extremely valuable in helping students realize their dream of becoming a dentist, but there are also major disadvantages.
You can have both: a DDS/DMD degree and a beach condo. The problem with other non-dental/ non-healthcare jobs is you don’t make enough to buy a $700k house. There are very few jobs out there that pay you $100k/year if you only have a BS/BA degree. Engineers are paid well but by the time they reach 50, their jobs will be taken away by younger grads. Dentistry offers job stability and a chance to become an owner. When you own a practice, the sky’s the limit.

If you can make $300k/year as an experienced associate dentist or as a GP owner, you should pay off the student loan debt ASAP (ie live on a $100k budget and use the other $200k to pay down the student loan debt….and you should be able to pay it off in less than 5 years), instead of stretching the loan repayment to 20 years and having to face a tax bomb after that. Don’t pursue dentistry if your goal is to work for someone else (and get stuck with a $120-150k annual income) for the rest of your life.

When my wife and I finished school at 28 and 29, respectively, we owed close to $1 million ($450k student loan, $120k business loan, $380k home loan, $55k credit card debt, and 2 leased cars). We are both specialists and our combined annual income at that time was slightly above $300k. With our good and stable dental income, we were able to upgrade from a smaller house to a bigger house. We used the profit that we earned from selling our 2 smaller houses to pay off the student loans (in less than 5 years). We didn’t stop working hard after the student loans were paid off. By our mid 30s, we owed more than $2 millions for purchasing 4 investment properties. I don’t think the banks would lend us such large amount of money, if we weren’t dentists and had low paying jobs. I will be 50 by the end of this year and I’ve just paid off my last debt in February this year.

Have I missed out on a lot of things for working so hard (some Saturdays and some Sundays) during my 20s, 30s, 40s? Nope. Actually, I have had a lot of things that most people at my age don’t have such as a relatively low stress job, a nice house in a safe neighborhood, good schools for our children, nice cars, expensive vacations, expensive meals, and the most important one….being financially independent.
 
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