I know you have been around the block and have probably a successful practice and want to help people out, but come on. 500K seems steep, not saying it isn't possible of course, but probably not fresh out of residency. I am assuming that you have to either buy into a practice or straight up buy the practice to get that income potential (also assuming that you have patient referrals etc.).
ADA says 2018 average specialty income is 330K(perio was actually listed at 269K).
BUT, I'm bored so I'll entertain the income you stated earlier. Going with 500K income taxed at 40% will leave you with 300K (25K/month as you said earlier). 1MM in loans at a very unrealistic initial 4% rate will net a 4K monthly payment of interest + whatever you actually want to put into the principle. If you made a 10K payment a month it would still take over 10 years. Don't forget your practice payment, mortgage, kids payments, healthcare insurance, 401K payments, trips etc..you know life expenses. That 15K won't feel like a lot and you wont have anytime to go on those trips because you will be "extremely motivated to produce and work." If the income is lower or the interest rate higher, it is only a worse situation.
OP's friend was already in a hole with 650K and I believe it was a poor decision, at this time, to continue on to an expensive school for a specialty. They should at least put a dent in the loans before pursuing further training.
Looking at Year 1 of a specialist associate v. GP associate, the specialist associate should make a lot more (looking at the best opportunies and average opportunities of GP/specialist associate positions). Depending on how much each one can make, the specialist associate has a lot more potential as an associate if they are crammed with high value procedures in different locations every day. GP associates require a high flow of daily patients to extract same day value. I think the ballgame totally changes when you become a practice owner. 500k/year no longer seems a lot and the potential to make a lot more becomes unlocked. That's when 1MM of loans seems a lot smaller.
So, to go down the list of all these other "payments":
- Practice payment: save as much as you can, defer debt as much as you can so you can afford a cheap startup. If you don't need to borrow money for a startup, don't.
- Mortgage: Live in an apartment for a year or two. In the midwest, you can probably wing a cheap 100k 3bedroom house. If you're employed as an independent contractor, you could deduct the rental costs potentially.
- Kids payments: Don't have kids yet. If you do, hopefully there's some loving grandparents you can pawn them off too to reduce their financial burden temporarily. Grandparents love kids to a certain extent and want to see them every weekend or so. Don't abuse this too much as grandparents do get sick of grandchildren, then you're SOL for free childcare and maintenance expenses.
- Healthcare insurance: You're young, get the cheapest insurance or no insurance unless you have a preexisting medical condition, then I'm sorry to say, you might be stuck in corporate for awhile. I know a few dentists that stuck at corporate because they needed insurance for their medical conditions and they were essentially a prisoner for awhile.
- 401(k) payments: wtf are you worrying about retirement at this early stage. Take the money and invest in yourself first. The matching might be good if your company matches, but your rate of return is exponentially higher in starting a practice. This only makes sense if you're a lifetime employee with no desire to own.
- Trips/life expenses: The first year is like a sprint. Make as much money as you can to get out of your prison known as associateship (unless you can make 750k-1MM+ per year as an associate). There shouldn't be time for trips on the first year.
That's why I push that people have to be extremely motivated to produce and work. Being a lazy 1 patient per hour type of dentist isn't going to cut it at those debt levels. It's not an easy path to begin, but it gets easier as you transition into practice ownership and beyond.
I used one of those loan calculators to determine what a monthly payment would be for 1MM @6%, 10 year term - came to about 11k/month. Now, this is probably a moot point, but if you're getting yourself into 1MM in loans, you need a concrete plan. If you can spend 200k to achieve the same result (a DDS/DMD), probably best to reduce your degree startup costs as much as possible. However, what's done is done and prepare to succeed or be prepared to live a life of mediocrity.
