I am almost finished with residency and have realized that the playing field of dentistry has changed a lot since i started college over 10 years ago. Dentistry is not as great as people have said it was and here are some reasons why:
Realistically, you are going to have to go into 200,000-450,000 of student loan debt. I just read that the average medical student graduates with 150K or so. The problem is that it was from 2007. Right now, the stafford loans for grad students is 6.8% and the PLUS loan rate is 7.9 if you get direct loans. Think about that! If you have 450K in student loan debt (don't think this unimaginable) at just 6.8%, your monthly INTEREST will be $2550 PER MONTH!!!! Say you think, "well I'm better than other people and will only rack up 250K". Your INTEREST only will be 1416-1645 a month. This is not the payment needed to repay the loan, it is the amount of interest that will be constantly accruing (some while in school, some while not) every day until paid off. Of course it will decrease as you pay it down, but that is a very significant amount.
Problem: schools will loan you absurd amounts of money to pay absurd amounts of tuition. I feel that a lot of pre-dental students are being LIED to by making it sound like it's not going to be very hard to pay the loans back. They'll stretch it over 25 years for you, but have you ever thought that if you don't become debt free for 25 years you may want to try a profession that could help you accomplish your goals without having to go 25 years in debt.
you can poke holes in my statement, because i am sure that most pay their loans off before 25 years. But think about this idea.
Let me loan you a quarter of a million dollars. Then i'll charge a "high" interest rate and let that accrue. It will end up being about another quarter of a million dollars over the course of the loan. maybe more maybe less. Then let me not require you to make payments until you are "rich" and making a couple hundred thousand dollars. let's just say you make 100K your first year (yes, that is realistic and if anyone tells you that it will be much more than that, you better get it in writing.)
So you will pay a half million dollars back to those who loaned the money to you and those who charged you tuition. What you may not realize is that you will be TAXED in a very high tax bracket. let's just say 30% for simplicity, but more than that is not unrealistic. There is no way I can think of that you can pay your student loans and a significant part of the interest on them without using POST-TAX DOLLARS. So in order for you to round up the half-million dollars, you must make close to 3/4 million dollars to pay it back.
Let's add it up:
1/4 million in tax you could have used to build your business pre-tax
1/4 million in interest
1/4 million to your institution for your education.
Just expect that it will be three times more expensive than you thought, and take 3 times longer to pay back than you thought.
Oh yeah, and dentists don't really make as much as they say they do. Talk to CPA's and they'll let you know that some dentists in perhaps your community are making under 100K (usually new ones).
Even making 250,000 a year, you won't have a pension, you'll work very hard (contrary to popular belief) and after paying for your own and your employee's health care (as opposed to having a job that provides that) and your student loan payments and TAXES (you will pay a lot of taxes . . . just think about half of what you make will go to taxes) you will end up with a discretionary income very similar or less than most of your neighbors.
Someone told me that I would be part of the top 5% earners in the population. What i wasn't told was that I'd pay a third of that in taxes and the other third or so would go to insurances, student loans, and other things to keep me from having people take my wife's house away if i died and that i'd be left with less discretionary income than some people with a fraction of my income.
Think about it long and hard. There are a lot of areas you can go into that will allow you just as much success financially as dentistry, or more.
Realistically, you are going to have to go into 200,000-450,000 of student loan debt. I just read that the average medical student graduates with 150K or so. The problem is that it was from 2007. Right now, the stafford loans for grad students is 6.8% and the PLUS loan rate is 7.9 if you get direct loans. Think about that! If you have 450K in student loan debt (don't think this unimaginable) at just 6.8%, your monthly INTEREST will be $2550 PER MONTH!!!! Say you think, "well I'm better than other people and will only rack up 250K". Your INTEREST only will be 1416-1645 a month. This is not the payment needed to repay the loan, it is the amount of interest that will be constantly accruing (some while in school, some while not) every day until paid off. Of course it will decrease as you pay it down, but that is a very significant amount.
Problem: schools will loan you absurd amounts of money to pay absurd amounts of tuition. I feel that a lot of pre-dental students are being LIED to by making it sound like it's not going to be very hard to pay the loans back. They'll stretch it over 25 years for you, but have you ever thought that if you don't become debt free for 25 years you may want to try a profession that could help you accomplish your goals without having to go 25 years in debt.
you can poke holes in my statement, because i am sure that most pay their loans off before 25 years. But think about this idea.
Let me loan you a quarter of a million dollars. Then i'll charge a "high" interest rate and let that accrue. It will end up being about another quarter of a million dollars over the course of the loan. maybe more maybe less. Then let me not require you to make payments until you are "rich" and making a couple hundred thousand dollars. let's just say you make 100K your first year (yes, that is realistic and if anyone tells you that it will be much more than that, you better get it in writing.)
So you will pay a half million dollars back to those who loaned the money to you and those who charged you tuition. What you may not realize is that you will be TAXED in a very high tax bracket. let's just say 30% for simplicity, but more than that is not unrealistic. There is no way I can think of that you can pay your student loans and a significant part of the interest on them without using POST-TAX DOLLARS. So in order for you to round up the half-million dollars, you must make close to 3/4 million dollars to pay it back.
Let's add it up:
1/4 million in tax you could have used to build your business pre-tax
1/4 million in interest
1/4 million to your institution for your education.
Just expect that it will be three times more expensive than you thought, and take 3 times longer to pay back than you thought.
Oh yeah, and dentists don't really make as much as they say they do. Talk to CPA's and they'll let you know that some dentists in perhaps your community are making under 100K (usually new ones).
Even making 250,000 a year, you won't have a pension, you'll work very hard (contrary to popular belief) and after paying for your own and your employee's health care (as opposed to having a job that provides that) and your student loan payments and TAXES (you will pay a lot of taxes . . . just think about half of what you make will go to taxes) you will end up with a discretionary income very similar or less than most of your neighbors.
Someone told me that I would be part of the top 5% earners in the population. What i wasn't told was that I'd pay a third of that in taxes and the other third or so would go to insurances, student loans, and other things to keep me from having people take my wife's house away if i died and that i'd be left with less discretionary income than some people with a fraction of my income.
Think about it long and hard. There are a lot of areas you can go into that will allow you just as much success financially as dentistry, or more.
.
