Dental School Debt and Life Afterwards (FINANCIAL SCENARIO)

[Doctorfish]

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Before I type away, I would first like to preface with this isn’t ALL about the money. Yes, money is important to me as I have a vision on the kind of life I would like to live, however, me choosing dentistry isn’t solely a financial decision. It is however, important to consider the financial situation I would be in if I do choose this path considering the amount of student loan debt I will acquire.

I would like to run through a scenario that you may be able to give insight towards:

-Starting dental school at age 23, finish at age 27
-$300K+ In student loans (before interest)
-Starting salary of around $120,000 working as an associate or for corporate office in a suburb of Florida

1) Could I purchase a house and car with these students loans. What price range should I be looking for in a house/car with these conditions if they were to stay exactly the same for 10 years.
2) Can you help me understand the breakdown of my income and how much of that money is allocated to taxes (is there some kind of tax break for students paying off debt?)

The scenario I tend to run in my head is living in Florida making $120,000 a year, that means about $90,000 usable income after taxes. That translates to $7,500 of usable income a month. When I do the math, over $300K in student loan debt with a common 7% interest rate will result in payments of about $3,500 a month. That only leaves me with $4,000 with usable income. Now this is where it gets tricky for me, is it possible to own a home that is $350,000+. I only point this number out because it is in range (for the market in FL) of the kind of house I envision growing a family in. I figure that takes away nearly $2,000 a month on a basic 30-year mortgage. Now I have $2,000 left to pay for a car, car insurance, water and electricity, food, cable/internet, home insurance/HOA etc... Not even to mention if I will be covered for medical/dental/malpractice insurance by the office I choose to work in. Is that $2,000 enough for ALL of these variables and STILL be able to save some for my own enjoyment/vacation as well as savings/investment money.

^Based off of this... did I play out the scenario correctly, or did I completely miscalculate or play out the scenario incorrectly? Is there a better way to play this scenario out financially? I am just so confused. It almost seems like I’ll have no money to actually use in the end, or better yet, not enough money to pay for everything.

 

[aubreyjokes]

Who knows how student debt will be in the future BUT right now there are many options to deal with your debt in a different way than just straight up paying it back dollar for dollar. For one if you are anticipating only making $120 a year as an associate you should consider working for a non-profit there are many programs that either erase your debt after a certain number of years or give you xx amount per year toward your debt. Secondly you're just going to apply for an income based repayment plan because then your payments are no more than 10% of your actual income - and then after xx amount of years its written off anyway - as an example I'm one of those poor saps with $600k in debt but instead of paying $6k a month of my $11k a month take home I only pay $972 plus I work for a non profit so after 10 years I'll have only paid back like $120k before its written off anyway.
Furthermore, I think you should pump the brakes about being super set on your real estate speculation. You don't have to graduate then buy your first home the next day and beyond that it doesn't need to be this raise-a-family-forever home, it's your first house and I would suggest you be flexible. And to answer your question about even getting a house - it has to do with your debt to income ratio if a bank will lend you the money and if that ratio is too high you're gonna need more down payment in order to get the loan amount down to an amount they will approve. (in the meantime you'll have to provide them what your monthly payments are so again if you do an income based repayment to lower your payments you'll be able to afford more house).
Either way, it sounds like you still have a long way to go so to me it feels like you're getting caught in the weeds a bit here. You're not going to go hungry but you aren't going to be filthy rich the day you graduate either.

 

[VladiAVB]

Would you be at all willing to compromise on what you want or how long you’re willing to wait to have it? Maybe you could wait to buy a home and save up first

 

[Doctorfish]

Who knows how student debt will be in the future BUT right now there are many options to deal with your debt in a different way than just straight up paying it back dollar for dollar. For one if you are anticipating only making $120 a year as an associate you should consider working for a non-profit there are many programs that either erase your debt after a certain number of years or give you xx amount per year toward your debt. Secondly you're just going to apply for an income based repayment plan because then your payments are no more than 10% of your actual income - and then after xx amount of years its written off anyway - as an example I'm one of those poor saps with $600k in debt but instead of paying $6k a month of my $11k a month take home I only pay $972 plus I work for a non profit so after 10 years I'll have only paid back like $120k before its written off anyway.
Furthermore, I think you should pump the brakes about being super set on your real estate speculation. You don't have to graduate then buy your first home the next day and beyond that it doesn't need to be this raise-a-family-forever home, it's your first house and I would suggest you be flexible. And to answer your question about even getting a house - it has to do with your debt to income ratio if a bank will lend you the money and if that ratio is too high you're gonna need more down payment in order to get the loan amount down to an amount they will approve. (in the meantime you'll have to provide them what your monthly payments are so again if you do an income based repayment to lower your payments you'll be able to afford more house).
Either way, it sounds like you still have a long way to go so to me it feels like you're getting caught in the weeds a bit here. You're not going to go hungry but you aren't going to be filthy rich the day you graduate either.

Thank you for the reply! That all sounds a lot less scary than the way I was working it in my head. I am only anticipating $120K a year as this is the lowest starting salary I have seen around here in Florida, at least to my knowledge. Do you think this income is too low of an anticipation?

Also can you explain what you mean by non-profit? The only options I thought I had was applying for a corporate office such PDS or like Aspen dental, or finding someone who needs an associate in their private practice.

I also do not expect to buy my first home right off the bat, I expect to save some for a down payment over the years, however, how many years should I expect to wait before I buy a home? Do you think I could afford a new car at least, right off the bat?

 

[Doctorfish]

Would you be at all willing to compromise on what you want or how long you’re willing to wait to have it? Maybe you could wait to buy a home and save up first

Yes definitely, I do not expect to be filthy rich from the start, nor ever. But I do expect some kind of financial stability for the hard work. How many years do you think I should wait before I buy a new home after becoming a practicing dentist?

 

[VladiAVB]

Yes definitely, I do not expect to be filthy rich from the start, nor ever. But I do expect some kind of financial stability for the hard work. How many years do you think I should wait before I buy a new home after becoming a practicing dentist?

I don’t know if I could really give you a number for that, it would depend on what your financial situation at the time looks like

 

[aubreyjokes]

On one hand I say good for you for thinking ahead BUT on the other hand I'd say you're overthinking and trying to over plan because the only thing I can tell for certain is that whatever you write down and plan today as far as these specific details will change and won't even be relevant in 4 years time.

 

[2thDoc11]

On one hand I say good for you for thinking ahead BUT on the other hand I'd say you're overthinking and trying to over plan because the only thing I can tell for certain is that whatever you write down and plan today as far as these specific details will change and won't even be relevant in 4 years time.

Besides military, is it pretty common to find work/non profits who are willing to help pay back loans? I know people used to say this about rural medicine, where you dedicate so many years and then they’d pay it off for you.. I’m in the same boat as I am really frugal with my money. I like to plan for the future and would like to be prepared for the worst case scenario.. I have the mindset of wanting to payback loans as quick as I can even if it means I have to like like a student for 5 more years before splurging a little. I’m in ND and being as we don’t have a school, I’m thinking I’ll have 5-600k in loans atleast.. pretty disappointing

 

[aubreyjokes]

Apply for One of Our NHSC Loan Repayment Programs | NHSC

nhsc.hrsa.gov

In addition to the national one there are also regional loan repayment programs you can even double dip in most cases