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[Illfavor]

Hello, just curious here. I'm a Canadian applicant applying to an American dental school so you can guess where the 400k worth of loans came from. However, a family friend offered me a job where I will make $175k first year after graduation working 5x a week. If this was the case, is the 400k debt worth it?

Thanks

Erm...can't you just google a loan repayment calculator?

 

[ToothbrushBuddy]

Wow what a sweet deal they are offering you!

 

[Dgeorg6]

Paying off 400k+ in loans within 5 years? Good luck with that.

If I was planning on taking out around 400k in loans I would definitely go the military route.

 

[gentlerwave]

$175k starting salary.. wow

If that salary is stable, I don't see any reason why you wouldn't be able to pay off a $400k loan if you live frugally for 5+ years.

 

[Mad Jack]

Paying off 400k+ in loans within 5 years? Good luck with that.

If I was planning on taking out around 400k in loans I would definitely go the military route.

OP is Canadian. I don't think they have an equivalent to the HPSP.

Would you be working in the US or Canada? Because that significantly impacts your post-tax earnings. In the US, you'd make about 112k after taxes (depends on state, I used mine). Interest on 400k in loans will be 28k a year. If you live like a student (on around 22k of post-tax cash a year) that leaves you with 62k to throw at the loan principle each year, and would require you to live in such a manner for 6.5 years. That is also if this job still exists when you graduate, which may not be the reality of the situation. Your minimum loan payment on such a high amount of debt would be $55,236 per year if it is at 6.8% interest and you did not use income-based repayment (I don't even know if Canadian loans have a PAYE or IBR program). Under IBR or similar, you would be looking at 26.25k of payments a year, which isn't even enough to cover the accruing interest, while PAYE would leave you with payments of 17.5k a year, and a ballooning debt that you could only be saved from if it were forgiven.

This is using US numbers. Canadian loans probably work significantly differently, and Canadian income tax is higher, so you would have less post-tax income to throw at the debt. Honestly, I'd have a hard time justifying that debt for that pay myself, unless you are willing to buckle down and live in near-poverty for the better part of a decade. I'm frugal, but damn, I spend about 32k a year- 22k would be too austere. That extra 10k going to spending would extend your repayment by about a year and a half, so you'd be looking at about 8 years of payments if you lived on 32k a year and threw everything else at the debt.

 

[Bereno]

From the OP, it seems as though they are asking if they should go to dental school which costs (to them) $400k, vs take a job (today?) for $175k... Did Iget this wrong? If that is the case, the 4 years of no income, $400k loan, and slow ramp up in salary is what dental school would present you with. However, it is also a very stable job that has a good potential for high income ($250k+) if you are smart about your business. The job you present has a very high starting salary, appears to be a weekday gig, and I can assume income will only go up or stay constant from there. The question is whether this is a stable job. If need be, I might work at this job for two/three years (if its not stable), save up a ton and use that to pay for most of your dental school costs. Honestly though this totally depends on the situation.

Just for fun, here is a very rough set of estimations based on NPV:

• A1 - Net present value of 175K for 10 years at 5%: $1,351,304
• B1 - Net present value of 175K for 20 years at 5%: $2,180,887
• C1 - Net present value of 175K for 30 years at 5%: $2,690,179
• A2 - Net present value of -$400K dental school after 4 years + 150k for 5 years + 250k for 1 year at 5%: $358,678
• B2 - Net present value of -$400K dental school after 4 years + 150k for 5 years + 250k for 5 years +$300k for 6 years at 5%: $1,671,975
• C2 - Net present value of -$400K dental school after 4 years + 150k for 5 years + 250k for 5 years +$300k for 16 years 5%: $2,545,048

Using these numbers and super rough estimations and assumptions, it looks as though that $175k would be a rockstar way to go IMO...

 

[Bereno]

Dammit! I just re-read the OP, so disregard what I posted above lol. 175K starting is pretty good salary if that offer still stands after graduation.

 

[Jungerr]

It would be a stable job, and I would just be an associate making this salary.

Also, this would be IN COMPARISON to my other career path, medicine. I have the grades (US GPA would be 4.0) and graduate in Canada with less than 200k in debt.

NOTE: I would probably work weekends too, while paying off my loans, if that makes a difference.

or... why not go to dental school in Canada, graduate with less debt, then take the American boards?