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Any Loan expert?

Discussion in 'Dental' started by hk64, May 5, 2018.

  1. hk64

    7+ Year Member

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    I am having difficulty making decision about which loan payment plan I need to apply for.
    Btw, I have graduated from one of the most expensive school (you know which), and I believe income driven payment plan would be beneficial.

    Currently, my student loan is a little bit less than 600k..(yes, scary number).
    And, assuming that I earn about 350k per year (on average for several years from now),
    PAYE will have total amount paid of ~$950k within 20 years, while REPAYE will be ~$1.28M within 25 years.
    (10 year plan would be $790k for 10 years, but I can't pay monthly payment of $6600 for ten years from now).
    Looking at the number above, PAYE seems to be better choice for me than REPAYE.
    The benefit of REPAYE is that they discount half of the annual interest. And, someone mentioned to be that if I work in the public service for one year during my 19th year, I can switch from REPAYE to PAYE, and finish off at 20th year, which will bring the less total amount paid within 20 year, comparing to straight PAYE plan for 20 years. Or, start with REPAYE, and have the benefit of discount on annual interest, and pay off the whole loan asap.

    Does any of you guys have any idea if that is a correct and reliable strategy? Or, do you guys recommend for student loan consultant?

    Thanks for reading.
     
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  3. doktorinprogres

    5+ Year Member

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    How do you figure you'll make 2.3x the mean dentist wage?
     
  4. Ivy.ch

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    How will you be making 3x's the typical salary for a new dentist?

    With 600k in debt, you need serious, professional help. Find a professional. I wouldn't take the word of some rando here on the internet .
     
  5. hk64

    7+ Year Member

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    Cause, I am expecting my income to raise up in next several years, just like dentists around my town.
     
  6. hk64

    7+ Year Member

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    Yes, I may need to have consultant meeting. Thanks.
     
  7. TMP-SMX

    TMP-SMX Senior Member
    Moderator Emeritus Gold Donor Classifieds Approved 10+ Year Member

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    Good luck. PSLF an option for you? 600k is obscene.
     
  8. Big Time Hoosier

    Big Time Hoosier Man. Myth. Legend.
    Dentist 2+ Year Member

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    Haven’t you already noticed that almost every predent and dental student on SDN vehemently believes that he or she is a statistical outlier? When reality hits, more often than not, it’s like jumping into a cold shower for them.

    ***PUBLIC SERVICE ANNOUNCEMENT: Go to the cheapest dental school you get into, or be prepared for extreme unpleasantness.***

    Good luck, OP! $200,000 to $300,000 in student loans is scary. $600,000 is simply crippling. I’d definitely meet with a legit financial planner. You’ve dug yourself quite the hole to now climb out of.

    Big Hoss
     
    #7 Big Time Hoosier, May 6, 2018
    Last edited: May 6, 2018
  9. 2TH MVR

    2TH MVR Orthodontist
    Dentist Gold Donor Classifieds Approved

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    OP:
    What is done is done. The good news is you are a dentist now. You have the ability to pay back your loan. Like others have said ... seek out professional loan paying strategy help. Plan to live frugally, work 6 days a week .... and start biting into that big loan. Also check out Penfed.org. Their loan rates are typically lower than most lenders. Easy to become a member.
     
  10. HKSZYU

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    @Student Loan Planner.

    Schedule an appointment with Travis (you can find his site in his profile). I talked to his assistant prior to starting D-school and it gave me a lot more peace of mind in relation to my loan situation. He caters to people with high debt loads and can probably find ways to help you save money.

    *Disclaimer: I'm not affiliated with his company in any way, just a happy customer.

    **Also, unless you're OMFS or own a practice in rural Iowa, $350k a year may be a bit ambitious. Not saying you can't do it, just encouraging pragmatism as you calculate how to make your repayments work.
     
  11. Dental School Digest

    Dental School Digest Midwestern '20
    Removed Account on Hold

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    A few things to consider when managing your student loan debt:
    • Consider refinancing and consolidating your student loan debt after dental school. Currently, you may only legally do this one time, so be wise. If you can achieve a much lower interest rate and put all your loans in the same bucket, that is ideal.
    • If you do manage to get a lower interest rate for your student loans, then consider just paying the minimum. This runs contrary to the advice of many, but that is largely because people are prone to thinking with their emotions where money is concerned. Read my next point to find out why I suggest this.
    • If you can earn a higher ROI on the market than you are paying in interest on your loans, then invest your money rather than paying back your loans. I would rather accrue 8% in compounding interest on the markets than try to pay off loans to try and avoid 5% compounding interest on student loans.
    • If you choose to invest the money you would have put towards your student loans, then consider this: if you make 7-8% on the market over 30 years, it was a better investment than paying off student loans with 5% interest or less. At the end of 30 years, you can take the money you made on the market from not paying your student loans, and use them to pay off your loans. There are important details I am glossing over here, like lump-sum investing vs. dollar-cost averaging, or the composition of your portfolio (stocks vs bonds) at 30 years. I highly recommend the Dough Roller Money podcast as a great place to learn more about personal finance.
    • Banks don't usually give small business loans to people without sufficient capital. You need enough liquid assets to survive for many months without income. The majority of businesses fail because they did not have enough liquidity to begin with. Dental practices still have one of the lowest rates of failure of any industry in the United States from what I understand. I know of one guy who maxed his student loans to have enough liquidity to secure a small business loan for a $1.2 mil grossing practice. He has absolutely no regrets. Was that risky? Sure. But the most rewarding business endeavors often are. Learning how to leverage debt is often what separates highly successful business owners from average business owners.
    • You will make a lot more money as a practice owner than as an associate. Your priority should be to own your own practice if you are serious about being financially secure.
    • Even if you do decide to pay back your student loans, you are better off doing so with the higher income of a practice owner, rather than as an associate. Yes, you will be managing even more debt, but the debt is leveraged to purchase a practice that will yield more money than was invested into it.
    • There is good debt and bad debt. Leveraged debt that almost guarantees a good ROI like a dental practice does is typically good debt. Given the relatively low failure rate of dental practices, it is also low-risk debt. Debt is psychologically discomfiting, but it is not necessarily a bad thing to have.
    • When investing, go for whole market index funds (lowest possible risk) with low expense ratios (cheap). Vanguard's Admiral Shares funds are an excellent choice. I personally avoid financial advisors because they end up costing a lot of money over time. Remember, a 1% fee from a financial adviser is 1% you didn't earn on your investments. That can be the difference between just paying back your loans versus investing and paying back later. Investing is actually really simple. In fact, one financial blogger created a list of nine financial rules on a sticky note. I think you'll find his advice is similar to mine: [​IMG]
    It can be tempting to wipe the slate clean and eliminate student loan debt. However, it may not be financially wise. It is best to assess your financial options and situation and then make an informed decision rather than an emotional one.

    Best of luck!
     
    #10 Dental School Digest, May 8, 2018
    Last edited: May 8, 2018
    bilbany12 and tarheel2017 like this.
  12. Student Loan Planner

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    Thanks for the mention @HKSZYU

    @hk64 I spoke with someone who was close to 700k the other day, so there are ppl out there worse off than where you find yourself.

    PAYE is probably more advantageous. Make sure you max your retirement accounts and put money away in a brokerage account as well for the tax bomb.

    If you ever had questions feel free to ask.
     
  13. SableFire

    2+ Year Member

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    700k? I have no words :vomit:
     
  14. Student Loan Planner

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    Yeah. One time I saw someone who didn't get along with the administration and they kicked them out in their last semester. Had to redo 2 years of dental school and take out even more debt. But that's not the 700k person I spoke with last week that I'm even talking about.

    It's crazy out there.
     
  15. Svart Aske

    Svart Aske is stabbing his eyes out
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    Unless it's a serious F-up by that student; that's some immoral sh$t on the part of the school.
     
  16. TanMan

    TanMan New Member
    Dentist Lifetime Donor Classifieds Approved 10+ Year Member

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    This is an unpopular opinion around here, but I'd recommend paying as little as possible and saving your money to startup (or acquire a practice as many people seem to have done here) your own office to get out of your debt trap asap. One of my biggest regrets was paying off my student loans really fast for the first few months. It feels good, but not good in the grand scheme of things. I got a wakeup call when I realized that my associateship money was peanuts compared to what was potentially out there with practice ownership. Once I got my practice up and running, I was able to easily start making 30k+ payments. Practice ownership will yield a lot more than your projected 350k/yr, you won't have to think or deal with this for 20+ yrs, and you can move on to bigger and better things in life.
     
  17. 2TH MVR

    2TH MVR Orthodontist
    Dentist Gold Donor Classifieds Approved

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    Agreed. I remember that my student loan payments were small since my overall debt was small. So I followed your advice and used most of my resources to buy into a partnership and 18 months later .... bought the entire practice. But remember that YOUR experience and situation may differ from the typical graduating dentist. Your numbers maybe considered outlier numbers which may not be applicable to the average dentist graduate. I fully agree that it is great to see successful dentists and their financials, but not everyone is an outlier.
     
    I-hate-alginate likes this.
  18. TanMan

    TanMan New Member
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    Fair enough, this is a great disclaimer that what works for me and you, may not necessarily work for others. However, devils advocate here, even if you were to only produce 1MM per year and assuming your operations were lean and mean, your pre-tax income would be greater than your associateship and allow you to pay down/invest more in the long term.
     
    schmoob and 2TH MVR like this.
  19. Student Loan Planner

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    Yeah I only got one side of the story, but still. I feel like the only way they should kick you out of school when you have that much debt is if you killed somebody in the chair
     

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