Bill passes House that will cap student loan borrowing

[ortho20255]

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There is no way there are enough applicants who can pay out of pocket for these expensive private schools. How many applicants do you think can realistically pay 700k? NYU takes 300 per class. USC is also up there. These private schools take hundreds of students. Meanwhile, my state school was like 50 per class.

As someone who has been graduated for 10 years and an investment portfolio, I would happily loan a dental student 800k at 9%. To be clear, I don't have this money, but I think loaning a dental student that much money at 9% is a good investment that I would love to do. There will absolutely be private lenders who step in to fill this space. Tuition isn't going to go down, the private lending market will step in the fill the gap. It is a safer bet than loaning someone with a 50k a year job money for a 60k car, and there is plenty of demand in the private loan sector for that.

 

[JacquesVallee]

As someone who has been graduated for 10 years and an investment portfolio, I would happily loan a dental student 800k at 9%. To be clear, I don't have this money, but I think loaning a dental student that much money at 9% is a good investment that I would love to do. There will absolutely be private lenders who step in to fill this space. Tuition isn't going to go down, the private lending market will step in the fill the gap. It is a safer bet than loaning someone with a 50k a year job money for a 60k car, and there is plenty of demand in the private loan sector for that.

Yeah, but those students won't be able to do IBR. That's what you're missing. They will be decimated when they *actually* have to pay back their loans. So many will default. The system can't survive that. When thousands of dentists graduate in 5 years and have monthly payments of 6k a month for 25 years, it will be obvious the emperor has no clothes.

I think mass school closures are still 5-10 years away. USC won't close this year, but let's hope I'm wrong...

 

[ortho20255]

Yeah, but those students won't be able to do IBR. That's what you're missing. They will be decimated when they *actually* have to pay back their loans. So many will default. The system can't survive that. When thousands of dentists graduate in 5 years and have monthly payments of 6k a month for 25 years, it will be obvious the emperor has no clothes.

I think mass school closures are still 5-10 years away. USC won't close this year, but let's hope I'm wrong...

I don't think dentists will default. They will have pretty miserable lives paying those loans back, and it will be really tough for 10 years, but I think by around the 10 year mark with inflation the loans won't be a big part of their budget. It will delay young dentists buying their first house by about 5 years, but they won't default on their loans, and it will just reduce the lifestyle they have. It's a terrible financial decision, but not to the point that they literally will have to default, they will just have the lifestyle of someone who makes 50k a year for 10 years, and then a middle class life after that

 

[Big Time Hoosier]

I don't think dentists will default. They will have pretty miserable lives paying those loans back, and it will be really tough for 10 years, but I think by around the 10 year mark with inflation the loans won't be a big part of their budget. It will delay young dentists buying their first house by about 5 years, but they won't default on their loans, and it will just reduce the lifestyle they have. It's a terrible financial decision, but not to the point that they literally will have to default, they will just have the lifestyle of someone who makes 50k a year for 10 years, and then a middle class life after that

And when predents figure this out, they’ll stop applying. They don’t want to live like that. The applicant pool will crash and schools will close. The same thing happened in the 1970s and 80s. It got so bad then that the applicant to spot ratio was like 1.1 to 1. Pretty much anyone who applied then was accepted. With a diminished applicant pool, several dental closed their doors. It appears history will repeat itself.

Plagued by Falling Enrollment, Dental Schools Close or Cut Back (Published 1987)

www.nytimes.com

Big Hoss

 

[JacquesVallee]

I don't think dentists will default. They will have pretty miserable lives paying those loans back, and it will be really tough for 10 years, but I think by around the 10 year mark with inflation the loans won't be a big part of their budget. It will delay young dentists buying their first house by about 5 years, but they won't default on their loans, and it will just reduce the lifestyle they have. It's a terrible financial decision, but not to the point that they literally will have to default, they will just have the lifestyle of someone who makes 50k a year for 10 years, and then a middle class life after that

You really think dental students who will have to pay 6k a month while making 120k a year won’t default? I know I wouldn’t have been able to afford that my first year out. Even if they could pay it, they’d have to pay it for 25 years. That is not even remotely sustainable.

 

[2TH MVR]

No lender in their right mind will make a non-collaterized /un-secured loan to a dental student without a CO-SIGNER. The personal guarantee will now be passed onto the parents of these students. I feel bad for the parents that need to say NO to leveraging their home, retirement to these loans.

 

[SigmaFS]

The financial pressure on universities has grown exponentially with the loss of federal research funding, the Depart of Education effectively decimated with the recent ruling, and the unprecedented decrease in graduate loan financing. Universities will target those programs that are not adding financial value to the parent university.

 

[Big Time Hoosier]

Dear administrators at NYU and USC,

Behold your future:

When dental schools closed: lessons for veterinary profession?

Student applications, not practice economics, drove decisions

news.vin.com

Sincerely,

Big Hoss

 

[TheeRockChewer]

FYI

https://www.adea.org/docs/default-source/adea-main/publications/adea-trends/adea_trends_2024_25.pdf?sfvrsn=1384b8f6_3

You know, I was just thinking of this.

 

[New_Vegas]

The financial pressure on universities has grown exponentially with the loss of federal research funding, the Depart of Education effectively decimated with the recent ruling, and the unprecedented decrease in graduate loan financing. Universities will target those programs that are not adding financial value to the parent university.

Its about time this happened. I can't think of a more corrupt institution than modern academia. I can't believe these slime balls were making kids go into almost a million dollars of debt for a dental degree. What a ripoff.

 

[juniordentist]

And when predents figure this out, they’ll stop applying. They don’t want to live like that. The applicant pool will crash and schools will close. The same thing happened in the 1970s and 80s. It got so bad then that the applicant to spot ratio was like 1.1 to 1. Pretty much anyone who applied then was accepted. With a diminished applicant pool, several dental closed their doors. It appears history will repeat itself.

Plagued by Falling Enrollment, Dental Schools Close or Cut Back (Published 1987)

www.nytimes.com

Big Hoss

Dental schools won't close. This is nothing like the 70s and 80s, the world was a different place then. Back then, you could do literally any university degree and you would be guaranteed a high paying job and a successful upper middle class life. So there were more options for people not to do dentistry.
Also, dentistry wasn't prestigious back then. Over the last 50 years dentistry has become known to be a highly paid, great lifestyle career. I don't think this is necessarily true anymore, but 50 years of public perception of this is going to take a lifetime to change.
These days, I don't really know many options at university that are great options? CRNA, PA, other mid level positions are good options. Medicine is a good option. Software engineering is on the decline. It's very hard to pick a good option. Very different to the 70s where you could do anything, literally an arts degree, and be successful.
People will still look at dentistry and think "my life will suck for 10 years after grad, but after that I will be killing it" and they will still apply. They don't realise that if they do CRNA or PA and save well for 10 years and invest that they will be better off

 

[JacquesVallee]

Dental schools won't close. This is nothing like the 70s and 80s, the world was a different place then. Back then, you could do literally any university degree and you would be guaranteed a high paying job and a successful upper middle class life. So there were more options for people not to do dentistry.
Also, dentistry wasn't prestigious back then. Over the last 50 years dentistry has become known to be a highly paid, great lifestyle career. I don't think this is necessarily true anymore, but 50 years of public perception of this is going to take a lifetime to change.
These days, I don't really know many options at university that are great options? CRNA, PA, other mid level positions are good options. Medicine is a good option. Software engineering is on the decline. It's very hard to pick a good option. Very different to the 70s where you could do anything, literally an arts degree, and be successful.
People will still look at dentistry and think "my life will suck for 10 years after grad, but after that I will be killing it" and they will still apply. They don't realise that if they do CRNA or PA and save well for 10 years and invest that they will be better off

How will dentists who make 120k a year pay 6k a month in loans for 25 years? Your entire argument makes sense if government loans were still infinite and students could pretend their loans didn't exist with IBR. Now that the charade is over, this system isn't stable, even with dentistry still seeming desirable.

 

[charlestweed]

How will dentists who make 120k a year pay 6k a month in loans for 25 years? Your entire argument makes sense if government loans were still infinite and students could pretend their loans didn't exist with IBR. Now that the charade is over, this system isn't stable, even with dentistry still seeming desirable.

Without the IBR, which IMO, is a bad repayment program and it’s good that the BBB eliminates it, they don’t have any other choices….either work less and live in poverty or work harder to escape it. Making $120k as a new grad is understandable because he’s slow and needs time to learn and improve the skill. But for a 3+ year veteran dentist to make this same amount, it is not acceptable….there must be something wrong with the work ethic or the skill. I don’t suggest one to work 6 days/wk for 10+ years. How about working hard for the first 3-4 years when one is young, healthy, has no kids and can handle such heavy work load? With the 6-day work week, one should make $200-250k….or more as one gains more experience and speed. And with the $250k income, one should be able to cut the $500k debt amount in half. And with the remaining loan balance of $250k (or less), one can slow down to 5 or less days/wk. All physicians have to do this for at least 3 years (it’s called medical residency). Why can’t young grad dentists do the same? One of the pluses of dentistry is you are not required to do a residency (unless you plan to practice in NY) after graduation.

With the IBR, the new grads have the option to stay in big cities and work 4 or less days a week because they're only required to set aside 10% of their income to repay their student loans ....and they don't feel the urgency to pay off the loans ASAP. But when the IBR is no longer an option and they are forced to do the standard 10-yr repayment option, they will have to move to more rural areas to make more money. So hopefully, this will solve the access to care problem.

 

[JacquesVallee]

they don’t have any other choices….either work less and live in poverty or work harder to escape it.

Or make the rational decision not to become a dentist. I would NEVER want to grind it out as a general dentist for 6 days a week for 3-4 years as you suggest. Holy cow, that sounds horrible. I have only worked 4 days a week as a GD and couldn't imagine working 6.

 

[charlestweed]

Or make the rational decision not to become a dentist. I would NEVER want to grind it out as a general dentist for 6 days a week for 3-4 years as you suggest. Holy cow, that sounds horrible. I have only worked 4 days a week as a GD and couldn't imagine working 6

Being an ortho, I’ve met a lot of young HS and college students in my office. Whenever these youngsters ask me if dentistry is a good career to pursue, I usually tell them straight to their face that debt is a huge problem and that IBR is a bad repayment program….and therefore, they will have to work 6 days for a few years after graduation to cut the debt amount by at least half before they can start relaxing. If they don’t think they can work like that, then they shouldn’t apply for dental schools. But if they think they can work hard and live like a student for a few years, then that’s great because it’s still a very good career, which beats a lot of other careers out there.

Yup, they can always choose another career. Whatever they choose, they should stay away from that horrible IBR program because it puts them on a leash for the next 20-25 years of their lives....and then a huge tax bomb afterward. Hopefully, my blunt my response scares them....and makes them think hard about whether they should pursue dentistry or not.

 

[SigmaFS]

I usually tell them straight to their face that debt is a huge problem and that IBR is a bad repayment program

And why is IBR a bad repayment program?

 

[Mr.Smile12]

And why is IBR a bad repayment program?

Just posted in the Financial Aid forum

Thread '(blog) Provisions Affecting Higher Education in the Reconciliation Law'

Jul 15, 2025

Provisions Affecting Higher Education in the Reconciliation Law - The Institute for College Access & Success

ticas.org

• Mr.Smile12
• Replies: 2
• Forum: Financial Aid

 

[charlestweed]

And why is IBR a bad repayment program?

It’s bad because it demotivates the young grads from pursuing their goals (financial independence, becoming a boss, early retirement etc) and puts them on a leash for next 20-25 years. Student loans are essentially a tax that you owe the government and they will stay with you forever, unless you pay them off. And the government (depending on who is in the White House) keeps changing the IBR repayment rules. Young grads shouldn’t live with such uncertainty for 20-25 years.

The problem with the IBR is the borrowers fail to recognize they have a debt problem because they only have to set aside 10% (of their income) to repay their loans and they can still live a very comfortable lifestyle even with a $100-120k income. Therefore, they don’t feel the urgency to get out debt ASAP by working harder to increase their income….no reason for them to work 6 days a week or to leave the oversaturated big cities to get higher paid jobs in rural areas. When the required debt repayment amount is so low, they spend, spend, spend….on vacation trips, cars, designer handbags and other stupid things. That’s what I’ve seen many young associate dentists, who are working at my corp/at my friends' practices and are on the IBR program, are doing.

20-25 years later (when they are in their late 40s-50s), the loan amount will be forgiven, but they will face a new debt…a tax bomb. At this mid-life stage, they should be enjoying life, on a semi-retirement mode, referring all the difficult cases to specialists and just doing the easy low stress procedures, having extra to help pay for their kids’ college education etc…..but instead, they have to continue to work hard to pay the tax bomb and to save for retirement. Young people fail to realize that they can’t stay young and healthy forever. Working as a dentist in the late 40s-50 with hand/back pain is miserable.

The goal should be to save (and invest) as much as you can when you’re young, healthy, and more productive so you won’t have to work in the future. Since dentistry is a stressful and physically demanding job, the sooner you can stop working, the better it will be. And IBR delays one from achieving this goal.

 

[Pablo Sanchez]

The goal should be to save (and invest) as much as you can when you’re young, healthy, and more productive so you won’t have to work in the future. Since dentistry is a stressful and physically demanding job, the sooner you can stop working, the better it will be. And IBR delays one from achieving this goal.

This is spot on. Charlestweed knows the way. Pay off your loans fast. Work hard young. Invest young. And you won’t have to work hard later. Work 6 days a week when you’re young and not only will you make more money, but you’ll grow your skillset faster leading to working more efficiently and being clinically competent the rest of your career. You’ll be able to produce more the rest of your career the more skilled you are all because you spent a couple of years working hard.

I worked M-F and two Saturdays a month for the first two and a half years. I grew my skillset so that I can now work 4.5 days a week and make well above $400k as an associate. I invested a lot of that money so now I am still in my twenties and have several hundreds of thousands of dollars compounding for me in the stock market. That means that I’m in my twenties making tens of thousands of dollars of interest a year just by doing nothing. Soon that will be hundreds of thousands a year for doing nothing. That takes the stress of having to produce and work off of my shoulders as I age.

Someone who does IBR and is making loan payments and paying tax bombs into their 50s will not have that luxury to the same extent. They’ll be bent over doing a class II with their bad back while I won’t have to be because I have no student loan payments to make.

 

[SigmaFS]

It’s bad because it demotivates the young grads from pursuing their goals (financial independence, becoming a boss, early retirement etc) and puts them on a leash for next 20-25 years. Student loans are essentially a tax that you owe the government and they will stay with you forever, unless you pay them off. And the government (depending on who is in the White House) keeps changing the IBR repayment rules. Young grads shouldn’t live with such uncertainty for 20-25 years.

The problem with the IBR is the borrowers fail to recognize they have a debt problem because they only have to set aside 10% (of their income) to repay their loans and they can still live a very comfortable lifestyle even with a $100-120k income. Therefore, they don’t feel the urgency to get out debt ASAP by working harder to increase their income….no reason for them to work 6 days a week or to leave the oversaturated big cities to get higher paid jobs in rural areas. When the required debt repayment amount is so low, they spend, spend, spend….on vacation trips, cars, designer handbags and other stupid things. That’s what I’ve seen many young associate dentists, who are working at my corp/at my friends' practices and are on the IBR program, are doing.

20-25 years later (when they are in their late 40s-50s), the loan amount will be forgiven, but they will face a new debt…a tax bomb. At this mid-life stage, they should be enjoying life, on a semi-retirement mode, referring all the difficult cases to specialists and just doing the easy low stress procedures, having extra to help pay for their kids’ college education etc…..but instead, they have to continue to work hard to pay the tax bomb and to save for retirement. Young people fail to realize that they can’t stay young and healthy forever. Working as a dentist in the late 40s-50 with hand/back pain is miserable.

The goal should be to save (and invest) as much as you can when you’re young, healthy, and more productive so you won’t have to work in the future. Since dentistry is a stressful and physically demanding job, the sooner you can stop working, the better it will be. And IBR delays one from achieving this goal.

Well, I don't think the financials support your position.

 

[JacquesVallee]

Well, I don't think the financials support your position.

View attachment 406692

This is probably the stupidest system our government could've ever devised. Thank goodness this nonsense is coming to an end.

 

[Big Time Hoosier]

This is probably the stupidest system our government could've ever devised. Thank goodness this nonsense is coming to an end.

Meanwhile, the USC dental school dean is weeping while listening to this song…



Big Hoss

 

[Big Time Hoosier]

Meanwhile, the USC dental school dean is weeping while listening to this song…



Big Hoss

All they had to do was buy me this watch and I would have picked up my MAGA hotline phone and made a call to stop this for them. Decisions have consequences, I guess.

Big Hoss

 

[charlestweed]

Well, I don't think the financials support your position.

View attachment 406692

Well, then go ahead and stick to this “wonderful” program. I already gave you list of reasons why IBR is bad. What you provided above may look good on paper but the reality is very different. Before the IBR, we, older grads had the option to consolidate our federal loans into one large low interest (as low as 3%) loan and stretch it to a 30 yr (instead of the standard 10 yr) term. I think this option was a lot better than this IBR thing. But to me, it was still a bad option (in comparison to the paying it off ASAP option) because it delayed my wealth building and retirement goals. Instead of motivating me to find ways to increase my income to pay off debt ASAP and to become wealthy, it encouraged me to keep my income low and to stay in debt forever. A lot of my friends told me to do the loan consolidation but I didn’t listen to them. I am debt free now and am enjoying practicing dentistry. Many of these friends are still working hard to pay off debt because they chose to work less and to be in debt for a longer period of time.

The Dept of Education is currently managing the $1.6 trillion debt for nearly 43 million borrowers. The current administration plans to eliminate this department and suggests the SBA to take over the student loan debt. And who knows what the SBA will do to you, borrowers? Why are you banking your future on politicians, who keep changing the rules as they go? Take charge of your life. Never place your trust in your government because it has always failed you. Just look at the failed promises on many of their programs: the social security program, the affordable care act etc.

Here is what Dave Ramsey said about the IBR. I know many people don’t like him….nobody likes to work 2 jobs and to eat rice and beans. Imagine if everyone listened to him, we wouldn’t have over $18 trillion in consumer debt.

The Truth About Income-Driven Repayment Plans

Income-Driven Repayment Plans cover four kinds of plans offered by the Department of Education to help federal student loan borrowers manage their payments.

www.ramseysolutions.com

 

[SigmaFS]

This is probably the stupidest system our government could've ever devised. Thank goodness this nonsense is coming to an end.

100% agree! It creates perverse incentives for all involved - Graduate programs have an unlimited supply of capital in the form of federal direct loans with no cost containment incentives, borrowers can game the system by borrowing freely while maintaining a more than comfortable lifestyle while in repayment, all the while passing the financial liability to the taxpayer.

As for coming to an end...it's getting shoved off a cliff and the landing could be ROUGH! Would have preferred a gradual decline, but we (as a society) seem to enjoy the extreme political pendulum swings. Let's see what happens to these professional programs (dent, DO, vet, pharm, chiro, podiatric, optometry, social work, etc) over the next few years.

 

[SigmaFS]

Meanwhile, the USC dental school dean is weeping while listening to this song…



Big Hoss

The consequences (ie, the Hersey thunder) will run its way to many!

University’s operating deficit exceeds $200 million, layoffs to come - Daily Trojan

The layoffs, among other measures, will address an increased deficit and potential losses of federal funding, wrote interim President Beong-Soo Kim in a statement.

dailytrojan.com

 

[SigmaFS]

Here is what Dave Ramsey said about the IBR. I know many people don’t like him….nobody likes to work 2 jobs and to eat rice and beans. Imagine if everyone listened to him, we wouldn’t have over $18 trillion in consumer debt.

The Truth About Income-Driven Repayment Plans

Income-Driven Repayment Plans cover four kinds of plans offered by the Department of Education to help federal student loan borrowers manage their payments.

www.ramseysolutions.com

If graduate students followed Dave Ramsey's philosophy of no educational debt, there would be very few graduate students. Dave Ramsey's advice may serve the general public well, but not necessarily graduate students.

A couple of responses:

• I believe more than 50% of recent decent dental graduates, and not limited to just dental programs, are females. The buckle down for 10 years on $700k debt paying $8200/month after tax might not align with their personal ambitions.
• 3% fixed rate for 30 years - Yes, rates are based on the 10-year Treasury plus a margin. When rates fall because of an economic event (2000 dot.com crash, 2008 real estate collapse, 2020 pandemic), a fortunate few can take advantage.

The recent reality is professional program costs are outrageous and unsustainable. But we are here. Some students/recent grads have made very naive decisions. Now, they must complete their due diligence and act in their best interest, which could an Income Driven Repayment plan. A course correction is on its way, but that will come with a whole set of new challenges.

 

[charlestweed]

If graduate students followed Dave Ramsey's philosophy of no educational debt, there would be very few graduate students. Dave Ramsey's advice may serve the general public well, but not necessarily graduate students.

A couple of responses:

• I believe more than 50% of recent decent dental graduates, and not limited to just dental programs, are females. The buckle down for 10 years on $700k debt paying $8200/month after tax might not align with their personal ambitions.
• 3% fixed rate for 30 years - Yes, rates are based on the 10-year Treasury plus a margin. When rates fall because of an economic event (2000 dot.com crash, 2008 real estate collapse, 2020 pandemic), a fortunate few can take advantage.

The recent reality is professional program costs are outrageous and unsustainable. But we are here. Some students/recent grads have made very naive decisions. Now, they must complete their due diligence and act in their best interest, which could an Income Driven Repayment plan. A course correction is on its way, but that will come with a whole set of new challenges.

If IBR didn’t exist and the standard 10-yr (or 20-yr or 30-yr) repayment plan was the only option and the students were told that they would have to pay $8200/month for a $700k debt, there would be fewer graduate students because they would realize that it’s not worth earning an advanced degree anymore. And schools would have problem filling their seats. Sadly, schools have used this flawed IBR program to do 2 bad things: 1. Raise the tuitions significantly and 2. Tell their prospective students that debt won’t be a problem because with this “wonderful” IBR, they will only have to set aside 10-15% of their income to repay their loans and their loans will be forgiven in 20-25 years (or in 30 years with the new RAP repayment program).

The government has never done anything right. The government created this debt crisis by giving out student loans to everyone….to useless art majors or majors that have no contribution to the economy. And this has led to the rapid increases in tuitions by the greedy schools in the last 10-15 years. And to put on the bandage to this newly created problem, the government came up with this silly income based repayment program. I feel bad for the young generation. It wasn’t their fault that they were born late. If they can’t get an education (because it’s too expensive), what are they going to do to pursue their dreams?

 

[Big Time Hoosier]

The government has never done anything right.

Big Hoss

 

[SigmaFS]

The government has never done anything right.

Clarification? As it relates to education only? Higher education? All government education? Is pre-k through 12th okay or should be privatized?

 

[JacquesVallee]

Clarification? As it relates to education only? Higher education? All government education? Is pre-k through 12th okay or should be privatized?

I think Charles is being hyperbolic and just making the point that often times the government will make problems significantly worse than they would if the issue was handled by the private sector. In this instance, if market forces were at play, dental school would've never cost 400k+. Hence, the government made the cost of education significantly worse.

Yes we need the government for fire and police departments, but holy cow also look at how inefficient going to the DMV is.

 

[SigmaFS]

I think Charles is being hyperbolic and just making the point that often times the government will make problems significantly worse than they would if the issue was handled by the private sector. In this instance, if market forces were at play, dental school would've never cost 400k+. Hence, the government made the cost of education significantly worse.

Yes we need the government for fire and police departments, but holy cow also look at how inefficient going to the DMV is.

Remaining in the education sector, how about the state university/college systems - TX, CA, MI, NY, etc... should we remove public funding from those institutions? Remove all federal research funding from higher education? Since this is dental specific, encourage Aspen, Heartland, PDS, and Delta Dental, market forces, to provide funding to educational institution. And/or create a higher ed system for those with financial means only?

 

[Mr.Smile12]

Yes we need the government for fire and police departments, but holy cow also look at how inefficient going to the DMV is.

But then we would never get to appreciate the humor of...

 

[JacquesVallee]

Remaining in the education sector, how about the state university/college systems - TX, CA, MI, NY, etc... should we remove public funding from those institutions? Remove all federal research funding from higher education? Since this is dental specific, encourage Aspen, Heartland, PDS, and Delta Dental, market forces, to provide funding to educational institution. And/or create a higher ed system for those with financial means only?

No, I’ve never believed the government should have zero involvement in education. The role of government in society is a nuanced conversation. It’s not a binary choice between no oversight and total control.

That said, government intervention can cause significant harm when it’s misaligned with incentives or lacks accountability. Take this example: if someone wanted to take out a million-dollar loan for an art degree, the federal government would have handed over the money with barely a second thought—no scrutiny, no ROI analysis. That’s peak insanity. Thankfully, moves like BBB have started to correct some of that recklessness.

I’m not advocating for a system that shuts out public funding or support. I’m advocating for one where the incentives make sense, where schools are held responsible for outcomes, and where government aid doesn’t fuel runaway costs that traps people in debt for low-return degrees

 

[Mr.Smile12]

Sheriff of Sodium's perspective

Post in: 'SDN Article: The “One Big Beautiful Bill”: How New Budget Legislation May Reshape Medical Training and Healthcare Access'

Friday at 7:59 AM

Sheriff of Sodium video

• Mr.Smile12

 

[SigmaFS]

That said, government intervention can cause significant harm when it’s misaligned with incentives or lacks accountability. Take this example: if someone wanted to take out a million-dollar loan for an art degree, the federal government would have handed over the money with barely a second thought—no scrutiny, no ROI analysis. That’s peak insanity. ankfully, moves like BBB have started to cThorrect some of that recklessness.

Maybe you don't recall my response to your earlier post:

100% agree! It creates perverse incentives for all involved - Graduate programs have an unlimited supply of capital in the form of federal direct loans with no cost containment incentives, borrowers can game the system by borrowing freely while maintaining a more than comfortable lifestyle while in repayment, all the while passing the financial liability to the taxpayer.

But you chose to respond on Charles' behalf excusing his irresponsible statement:

The government has never done anything right.

Now, there are recent graduates with $600k+ student loan debt & debt-to-income ratios of 3:1 or greater. If Charles does not want to acknowledge that IBR is a reasonable consideration for these borrowers, let it be. Is your place to defend his position?

And regarding, "Thankfully, moves like BBB have started to correct some of that reckless"...my response in a prior post was, " A course correction is on its way, but that will come with a whole set of new challenges." This is not limited to dentistry...vet, pharm, chiro, md/do, optometry, law, social work, other professional graduate programs. Let's revisit this discussion in 2 to 5 years.

 

[charlestweed]

Maybe you don't recall my response to your earlier post:

100% agree! It creates perverse incentives for all involved - Graduate programs have an unlimited supply of capital in the form of federal direct loans with no cost containment incentives, borrowers can game the system by borrowing freely while maintaining a more than comfortable lifestyle while in repayment, all the while passing the financial liability to the taxpayer.

But you chose to respond on Charles' behalf excusing his irresponsible statement:

Now, there are recent graduates with $600k+ student loan debt & debt-to-income ratios of 3:1 or greater. If Charles does not want to acknowledge that IBR is a reasonable consideration for these borrowers, let it be. Is your place to defend his position?

And regarding, "Thankfully, moves like BBB have started to correct some of that reckless"...my response in a prior post was, " A course correction is on its way, but that will come with a whole set of new challenges." This is not limited to dentistry...vet, pharm, chiro, md/do, optometry, law, social work, other professional graduate programs. Let's revisit this discussion in 2 to 5 years.

IBR is a bad option because it delays the inevitable. The debt has to be paid off eventually one way or another. IBR doesn’t necessarily help one to pay less because of the eventual tax bomb + the repayment rule, that keeps changing. Since the pathway to become a dentist is a lengthy one, one can’t start earning an income until he/she is 26-27 yo. So why not work hard to pay it off ASAP, start building wealth, and enjoying life in the mid 40s and 50s? Why choose to be in debt at this late stage of life? IBR delays one's dream.

Because the standard 10-yr plan doesn’t give a borrower any other choices, it forces him/her to make better life decisions such as: working harder, teaching oneself to become a more skillful and more efficient dentist, living within one’s means (living like a student, living with parents/roommates, no vacation, no new car etc), having a written spending budget, learning to keep the overhead low (when he is ready to open an office) etc.

IMO, 6-month grace period is a reasonable amount of time to allow a person to find a job (or get more than one job) and to get things in order. If one faces a financial hardship, one can file for forbearance. And that’s what I did when I did a year of GPR and 2 years of ortho residency. And if one becomes permanently disabled, he can apply for a loan forgiveness.

This is why I am a fan of Dave Ramsey. He advises people to force themselves to do a 15-yr home mortgage (even though there's a 30-yr option) when buy a house. And the monthly mortgage payment has to be no greater than 1/4 of their income. If one can't do that, it means one can't afford a house....or looks for a smaller house to buy. By forcing oneself to have a much tighter budget (15-yr mortgage requires higher monthly payment than a 30-yr mortgage), it gives him/her less chance to waste money on stupid things like leasing a car, taking a vacation while being in debt etc.

 

[SigmaFS]

IBR is a bad option because it delays the inevitable. The debt has to be paid off eventually one way or another. IBR doesn’t necessarily help one to pay less because of the eventual tax bomb + the repayment rule, that keeps changing. Since the pathway to become a dentist is a lengthy one, one can’t start earning an income until he/she is 26-27 yo. So why not work hard to pay it off ASAP, start building wealth, and enjoying life in the mid 40s and 50s? Why choose to be in debt at this late stage of life? IBR delays one's dream.

Because the standard 10-yr plan doesn’t give a borrower any other choices, it forces him/her to make better life decisions such as: working harder, teaching oneself to become a more skillful and more efficient dentist, living within one’s means (living like a student, living with parents/roommates, no vacation, no new car etc), having a written spending budget, learning to keep the overhead low (when he is ready to open an office) etc.

IMO, 6-month grace period is a reasonable amount of time to allow a person to find a job (or get more than one job) and to get things in order. If one faces a financial hardship, one can file for forbearance. And that’s what I did when I did a year of GPR and 2 years of ortho residency. And if one becomes permanently disabled, he can apply for a loan forgiveness.

This is why I am a fan of Dave Ramsey. He advises people to force themselves to do a 15-yr home mortgage (even though there's a 30-yr option) when buy a house. And the monthly mortgage payment has to be no greater than 1/4 of their income. If one can't do that, it means one can't afford a house....or looks for a smaller house to buy. By forcing oneself to have a much tighter budget (15-yr mortgage requires higher monthly payment than a 30-yr mortgage), it gives him/her less chance to waste money on stupid things like leasing a car, taking a vacation while being in debt etc.

It seems that you didn't bother to review the spreadsheet that I provided because it might challenge your perception. A couple of points; by the 2nd yr of practicing, it assumes an AGI of $225,000 (unlike your position that those on IBR are only motivated to make $100k - $120k), then increasing AGI to ~$350k. If they invest approximately $1,000/month over 20 years returning 8%, the cost of the loan over 20 years (so consider the time value of money) is $717,563 on an original balance of $700,000. They paid about $18k in interest of the 20-year life of loan. Yes, you somehow think this is not a prudent & reasonable approach. Could be because you're a fan of Dave Ramsey.

Dave Ramsey's for high income earners is not the most thoughtful approach. For example, leverage use properly can exponentially increase net worth. You mentioned a 15-year mortgage - how many would not qualify for 15-mortgage resulting in the lost opportunity for home equity increases. Would these individuals you better off paying rent, likely comparable a mortgage payment, creating no wealth opportunity? Sticking with a 15-year mortgage, what if you secure a 30-year at rate of 2.875%? A 15-year mortgage is still preferred? I just don't agree with some of your positions.

The reality is there are recent dental graduates with $500k+ student loan debt & debt-to-income >2:1. They need to carefully consider all the repayment options within the context of their financial & personal goals.

 

[JacquesVallee]

It seems that you didn't bother to review the spreadsheet that I provided because it might challenge your perception. A couple of points; by the 2nd yr of practicing, it assumes an AGI of $225,000 (unlike your position that those on IBR are only motivated to make $100k - $120k), then increasing AGI to ~$350k. If they invest approximately $1,000/month over 20 years returning 8%, the cost of the loan over 20 years (so consider the time value of money) is $717,563 on an original balance of $700,000. They paid about $18k in interest of the 20-year life of loan. Yes, you somehow think this is not a prudent & reasonable approach. Could be because you're a fan of Dave Ramsey.

Dave Ramsey's for high income earners is not the most thoughtful approach. For example, leverage use properly can exponentially increase net worth. You mentioned a 15-year mortgage - how many would not qualify for 15-mortgage resulting in the lost opportunity for home equity increases. Would these individuals you better off paying rent, likely comparable a mortgage payment, creating no wealth opportunity? Sticking with a 15-year mortgage, what if you secure a 30-year at rate of 2.875%? A 15-year mortgage is still preferred? I just don't agree with some of your positions.

The reality is there are recent dental graduates with $500k+ student loan debt & debt-to-income >2:1. They need to carefully consider all the repayment options within the context of their financial & personal goals.

I do think that if your debt to income ratio is >2:1 it is better to be on IBR for your average person. As you save for the tax bomb you should also still be able to save for retirement. I just think the psychology of owing 500k+ of loans for 25 years takes a toll. I'd never want to do it. I'd also never want to rely on the government to forgive my loans.

With that said, I reiterate, this is quite literally the stupidest system ever devised. It's a con where dental schools found a loophole to get as much money as they want indirectly from the tax payer in sinister fashion. However, yeah if you own 300k+ of dental school loans you probably should go on IBR. Gotta play within the stupid system you're given.

 

[charlestweed]

It seems that you didn't bother to review the spreadsheet that I provided because it might challenge your perception. A couple of points; by the 2nd yr of practicing, it assumes an AGI of $225,000 (unlike your position that those on IBR are only motivated to make $100k - $120k), then increasing AGI to ~$350k. If they invest approximately $1,000/month over 20 years returning 8%, the cost of the loan over 20 years (so consider the time value of money) is $717,563 on an original balance of $700,000. They paid about $18k in interest of the 20-year life of loan. Yes, you somehow think this is not a prudent & reasonable approach. Could be because you're a fan of Dave Ramsey.

Dave Ramsey's for high income earners is not the most thoughtful approach. For example, leverage use properly can exponentially increase net worth. You mentioned a 15-year mortgage - how many would not qualify for 15-mortgage resulting in the lost opportunity for home equity increases. Would these individuals you better off paying rent, likely comparable a mortgage payment, creating no wealth opportunity? Sticking with a 15-year mortgage, what if you secure a 30-year at rate of 2.875%? A 15-year mortgage is still preferred? I just don't agree with some of your positions.

The reality is there are recent dental graduates with $500k+ student loan debt & debt-to-income >2:1. They need to carefully consider all the repayment options within the context of their financial & personal goals.

Why do people choose the IBR option? Because they know their income will not be high enough to repay their massive loans with the 10-yr repayment plan. Why do they think they don’t make high enough income? Because it requires hard work and sacrifice but they don’t want to make sacrifices like working 6 days/wk, moving to rural less saturated areas, living like a student, eating rice and beans etc. Everyone wants to live like a king but doesn't want to work hard. I do want such lifestyle too. I would probably choose the IBR option too if it was available to me when I graduated. Instead of having the kind of financial security (100% debt-free, money saved for retirement, debt-free education for my kids etc) that I have now, I would be in a serious financial trouble if I chose the IBR route. Thanks God, there was no IBR option for me....otherwise, I would have fallen into this trap as well. With a combined student loan debt of $450k (which was probably equivalent to $650-700k in today dollars) that my wife and I owed, we had to make at least $300k in order to live comfortably while making the required minimum loan repayment of $5500/month. And to make $300k, we each had to work 6 days/wk…we didn’t have any other choices…..didn’t want to be poor. 20-25 yrs ago, orthodontists only made $700-800/day, periodontists only made $500/day, and GPs only made $300/day.

The chart that you provided has a lot of assumptions that don’t really match what I’ve seen in the real world. It’s true that with experience and speed, new grad dentists will see an increase in dental income. But to make $200k/yr working only 4 days/wk as an associate dentist (that’s $1000/day) is not easy and it’s very rare, especially in oversaturated big cities, where most new grads want to live. The practice owners may not have enough patients to keep their associates busy. To get more patients, the associates may have to get a 2nd job somewhere else. The problem is when one has been spoiled with a 4-day work week for years, it’s hard to increase the work days to 5 or 6 days. Other things like insurance companies and medicaid cutting their pays to the dentists also affect dentists’ salaries.

Not everyone has the discipline and the money (even for $1000/month) to set aside to invest in the S&P. Americans are addicted to spending and living on borrowed money. Even with the IBR option, a $120-150k/yr income is not enough. Dentists have to buy their own health insurance…that’s $1000/month (or $2000 for a family of 4) going down the drain. Auto insurance, malpractice insurance, rent, utility, food, eating out with friends, and a bunch of other stupid monthly subscriptions….little things add up.

 

[charlestweed]

Dave Ramsey's for high income earners is not the most thoughtful approach. For example, leverage use properly can exponentially increase net worth. You mentioned a 15-year mortgage - how many would not qualify for 15-mortgage resulting in the lost opportunity for home equity increases. Would these individuals you better off paying rent, likely comparable a mortgage payment, creating no wealth opportunity? Sticking with a 15-year mortgage, what if you secure a 30-year at rate of 2.875%? A 15-year mortgage is still preferred? I just don't agree with some of your positions.

I don’t consider dentists, who have $500+k student loan debt, high income earners. To me, they are broke dentists. And to the guys and gals who want to date or marry these broke dentists, you should be very careful. Make sure these broke dentists have a solid plan to tackle debt because financial stress is one of the leading causes of divorce.

Nope, not a lot of people want to listen to Dave Ramsey. That’s why there are more than 70% of people in this country who are living paycheck to paycheck. To him, debt is not just a math problem. It’s also a behavior problem. So his approach is behavior modification.

 

[SigmaFS]

I don’t consider dentists, who have $500+k student loan debt, high income earners.

There is a difference between net worth and earnings, but I guess we can define financial terms as we see fit.

With a combined student loan debt of $450k (which was probably equivalent to $650-700k in today dollars) that my wife and I owed

Apparently, you really aren't a Ramsey devotee because Ramsey strongly discourages, ie chastises, those with that level of education debt. Maybe your philosophy is, "Those rules apply to thee, and not to me." Having said that, I feel more consideration should be given to your debt-to-income ratio vs student debt amount. Was your spouse a high-income earner or was she broke (liabilities > income) when you married her despite your admonition that you need to be very careful (or maybe she should have been wary of you)?

To him, debt is not just a math problem. It’s also a behavior problem. So his approach is behavior modification.

And despite Rasmey's position, you & your wife chose not to follow his prudent financial advice, and take on $650-$700k educational debt in today's dollar...

Everyone wants to live like a king but doesn't want to work hard. I do want such lifestyle too.

Your use of absolute terms, including, "The government has never done anything right." seems to demonstrate some level of disconnection from reality...everyone wants to live like a king but doesn't want to work hard, really?

Oh well, we'll probably agree to disagree.

 

[charlestweed]

There is a difference between net worth and earnings, but I guess we can define financial terms as we see fit.


Apparently, you really aren't a Ramsey devotee because Ramsey strongly discourages, ie chastises, those with that level of education debt. Maybe your philosophy is, "Those rules apply to thee, and not to me." Having said that, I feel more consideration should be given to your debt-to-income ratio vs student debt amount. Was your spouse a high-income earner or was she broke (liabilities > income) when you married her despite your admonition that you need to be very careful (or maybe she should have been wary of you)?

And despite Rasmey's position, you & your wife chose not to follow his prudent financial advice, and take on $650-$700k educational debt in today's dollar...


Your use of absolute terms, including, "The government has never done anything right." seems to demonstrate some level of disconnection from reality...everyone wants to live like a king but doesn't want to work hard, really?

Oh well, we'll probably agree to disagree.

I didn't know who Dave Ramsey was until recently. He made a lot of mistakes during his youth years. He lost everything, became broke, and he learned from his own mistakes. Like him, I did a lot of stupid things when I was a young grad. I didn't realize i was broke because I thought I was a "high income earner." I bought BMW, Mercedes, high end furniture.....sold a small house and upgraded to a 5200sf house etc. By the time I turned 35-36, I had close to $2M in debt. And then the 2008 housing bubble/recession occurred. A lot of my neighbors lost their houses. My house was worth less than what I owed on it. This was a wake up call for me. That's when I realized I was broke. So I punished myself for making bad financial mistakes by working 6 days/wk until I turned 49, when I paid off my last debt.

My house and 3 of my rental properties are all on 30-yr loan terms. But I paid them off in 6-7 yrs. The primary house had the biggest amount so it took me 15yrs to pay it off. Some of the loan interest rates were under 4%. My cpa suggested me not to pay off and that I should invest more on other things. But I didn't listen to my cpa and paid everything off because I didn't want to be in more debt and have to work forever. I am not getting any younger. It feels good not to have the pressure of having to get out of bed to go to work. Work is more enjoyable now. I wish I heard about Dave Ramsey sooner

 

[charlestweed]

Hopefully, the big beautiful bill will put an end to this.

 

[yappy]

Dave Ramsey has good general advice but he’s too dogmatic. White Coat Investor has the same principles but is a much better resource for the specific challenges that dental students face - skip Dave Ramsay and proceed to WCI.