Guide to Paying off Student Loans

[CaliDDS1986]

Boom! You graduate dental school and get your diploma, congrats! First email comes, "loan payments are due soon." WTF DO I DO NOW?

Unfortunately the diploma doesn't come with money, only the ability to make that money. Fortunately, dentistry pays very well for the services you can provide. About me: recent graduate (2012) that had 240k when graduating. I did a 1 year GPR and have been associating since. I have made serious headway on my loans to the tune that it's down to 130k currently. This is all on 1 year GPR and being an associate in a crappy saturated market with crappy pay. I plan to pay it off in the next year and a half, student loan free when I am in 30.5 years old. Be in a prime position to buy a practice without dealing with student loans with an excellent credit score. You can do this too!

A) live well below your means. I'm talking literally live like a homeless person. I lived at home with my parents and my fiancé with hers. Do not buy anything you don't have to! All your money should be going to your loans, ALL OF IT!
B) do not listen to naysayers or pessimists. Anything can be done if you are willing to work hard
C) refinance your loans to a lower rate
D) do not be fooled into IBR or PAYE. The quicker you pay off your debt now, the quicker your free. Debt is a poison, don't let anyone tell you anything different.
E) work hard and remain optimistic
F) don't be fooled into thinking that 'buying a specialty degree' will earn you higher earning potential. I know many specialists in their 40s struggling. Do it if you actually enjoy the field, passion will breed motivation, motivation will breed ambition, ambition to pay off your loans.

I am on the front lines every week of dentistry. I have worked all through my life and dental school. It is a stressful job, but so are other jobs that pay a lot less. You can all pay off your loans sooner than later.

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[doc toothache]

Unfortunately the diploma doesn't come with money, only the ability to make that money. Fortunately, dentistry pays very well for the services you can provide. About me: recent graduate (2012) that had 240k when graduating. I did a 1 year GPR and have been associating since. I have made serious headway on my loans to the tune that it's down to 130k currently. This is all on 1 year GPR and being an associate in a crappy saturated market with crappy pay. I plan to pay it off in the next year and a half, student loan free when I am in 30.5 years old. Be in a prime position to buy a practice without dealing with student loans with an excellent credit score. You can do this too!

D) do not be fooled into IBR or PAYE. The quicker you pay off your debt now, the quicker your free. Debt is a poison, don't let anyone tell you anything different..

You must have a heck of a "crappy" job "with crappy pay" to have paid off 90K while coasting through a GPR. "Debt" may be "a poison", but you seem eager to gulp another triple dose.

 

[CaliDDS1986]

You must have a heck of a "crappy" job "with crappy pay" to have paid off 90K while coasting through a GPR. "Debt" may be "a poison", but you seem eager to gulp another triple dose.

Just trying to give a little positive to student debt based on my experience. Not sure why you're getting defensive, but that's ok. Plus a 1 year GPR that is paid, plus 1.5 years associating paying 110k over that stretch is not that difficult bud.

 

[jeffk805dent]

couple of things I am skeptical of:

Curious to know if you really worked in a saturated city or in a rural area like Victorville/Coalinga, because in CA (which I am guessing you are in now), you have to remove 35-38% for taxes leaving little if you want to live in a house/rent, car, etc.

keep in mind some people might want to get married, living with parents while married wont sit well with most

live below your means, I get what you are saying here but its easier said than done. For example, how many people could ride the bus for the next 6 months with ease instead of drive. It takes discipline but also realistic expectations.

agree with not doing IBR/PAYE, government needs its money, one way or another

 

[Bereno]

I would do it a little differently to be honest. In particular, I disagree with point A. I would actually pay the minimum loan payment I could while being an associate, and use the difference to buy a practice. The added income potential of owning a practice far outweighs the extra paid in interest on your student loans for 2-3 years more.

Other than that, I agree that hard work and good manners will get you far in this profession.

 

[Cold Front]

Interesting topic. I had a different approach to OP.

2010: Graduated. I was 31.5 years of age. $260k debt. Opened my first office right out of school.

2014: I now own 3 offices, in the process of buying a building my first office is in.

2015: Will pay off all my school loans this year.

Don't student debt scare you. Put focus on potential. The rest will fall in place.

 

[jeffk805dent]

Interesting topic. I had a different approach to OP.

2010: Graduated. I was 31.5 years of age. $260k debt. Opened my first office right out of school.

2014: I now own 3 offices, in the process of buying a building my first office is in.

2015: Will pay off all my school loans this year.

Don't student debt scare you. Put focus on potential. The rest will fall in place.

Damn someone must be hustling real well. I'm taking a wild guess that these are in Boston (I understand if you dont want to disclose location). I'm thinking of getting another year of work before setting up private practice, I'm way too risk averse.

 

[CaliDDS1986]

Interesting topic. I had a different approach to OP.

2010: Graduated. I was 31.5 years of age. $260k debt. Opened my first office right out of school.

2014: I now own 3 offices, in the process of buying a building my first office is in.

2015: Will pay off all my school loans this year.

Don't student debt scare you. Put focus on potential. The rest will fall in place.

Appreciate your opinion. Like I said that's my side of the story and I follow dave Ramsey's thinking of debt. The problem with predent and dental students is everyone thinks they will be excellent at business and own 4 offices making 500k per year. That's just not the case.

 

[Cold Front]

Appreciate your opinion. Like I said that's my side of the story and I follow dave Ramsey's thinking of debt. The problem with predent and dental students is everyone thinks they will be excellent at business and own 4 offices making 500k per year. That's just not the case.

I agree. Not everyone is cut for owning and running a business. It's very time consuming and stressful, but what you get out what you put into.

Some grads sign up for military scholarships, and have $0 debt in 4 years. Others choose income based repayment to pay their loans and work as associates.

Everyone equally had the same choices when they entered the profession. 10 years later, the choices will not take you the same destination in life, financially.

Many of my classmates were so stressed out about class-ranks during dental school, but never made the same effort to worry about the real world plans.

Plan for the future, not just where you finish your class or your first job.

 

[charlestweed]

Boom! You graduate dental school and get your diploma, congrats! First email comes, "loan payments are due soon." WTF DO I DO NOW?

Unfortunately the diploma doesn't come with money, only the ability to make that money. Fortunately, dentistry pays very well for the services you can provide. About me: recent graduate (2012) that had 240k when graduating. I did a 1 year GPR and have been associating since. I have made serious headway on my loans to the tune that it's down to 130k currently. This is all on 1 year GPR and being an associate in a crappy saturated market with crappy pay. I plan to pay it off in the next year and a half, student loan free when I am in 30.5 years old. Be in a prime position to buy a practice without dealing with student loans with an excellent credit score. You can do this too!

A) live well below your means. I'm talking literally live like a homeless person. I lived at home with my parents and my fiancé with hers. Do not buy anything you don't have to! All your money should be going to your loans, ALL OF IT!
B) do not listen to naysayers or pessimists. Anything can be done if you are willing to work hard
C) refinance your loans to a lower rate
D) do not be fooled into IBR or PAYE. The quicker you pay off your debt now, the quicker your free. Debt is a poison, don't let anyone tell you anything different.
E) work hard and remain optimistic
F) don't be fooled into thinking that 'buying a specialty degree' will earn you higher earning potential. I know many specialists in their 40s struggling. Do it if you actually enjoy the field, passion will breed motivation, motivation will breed ambition, ambition to pay off your loans.

I am on the front lines every week of dentistry. I have worked all through my life and dental school. It is a stressful job, but so are other jobs that pay a lot less. You can all pay off your loans sooner than later.

Great advice! I’ve said the same things to my kids, my nieces, my nephews and other college kids, who want to become a dentist. People say you become more mature when you move away from home as soon as possible. I, on the contrary, believe that the kid, who tries to avoid taking out student loans by living with his/her parents, is the smarter and more mature person. My sister and I have the kind of lifestyle that most people wish to have because we continue to listen to our parents until this very day. The sooner you get rid of the debt, the better it will be for you. I don’t think you want to see your own kids suffer because of the immature decisions that you made a few years ago… such as borrowing student loan money that you didn’t really need. Without business and student loan debts, I am not under a lot of pressure to produce. I get to do what I enjoy…. more dentistry and less managing, less selling, less advertising. Recession, housing bubble, stock market crash, slow days, half-filled schedule don’t really bother me.

I also agree that not every dentist is good at running a successful dental practice. From working for the dental chains, I’ve met a lot of dentists, who invested a lot money to start their own dental practices but failed. They had to sell their practice and came to work for the chains. Dentistry has changed a lot. New grad dentists owe a lot more in student loans and the competition among dentists is getting worse every year. I didn’t need to follow your advice and I still do OK. I bought a nice house and leased nice cars right after graduation and I still do OK because unlike today new grads, I didn’t owe a lot in student loans. I had good paying associate jobs and the competition wasn’t too bad 10-15 years ago.

 

[Faux]

i'm guessing you need 25% downpayment for business practice loan right? Whats the average cost anyway? 500k?

 

[cmcner]

A lot of people are graduating with $500k or more in loans now so, you'll be living like a homeless person for a long time, especially because all of the loans above the $240k you started at will be at 7.9% interest for them. I don't think those people are in the best position to put all of their income into loans for like 8-9 years because then they'll be starting from $0 on retirement and $0 on saving for a practice or a home. I'd say for those people income based (while saving for the 25 year tax hit) or a loan forgiveness program are the best options.

 

[Cold Front]

Hey @Cold Front,

You need to make an 'Ask Me Anything' thread Reddit-style in this forum regarding your background and how you're making it in dentistry. There is much that can be learned from you!

That would be a good idea. But there is a team of "Ask Us Anything" on these boards, from Daurang, DrJeff, Charlestweed, and so on. We all own our own practices, and usually have a common or similar perspective on how to manage debt and live financially responsible life as a dentist.

I'm an avid follower of many non-dental related topics, from national and local politics, economics, to trends in small and large businesses. I also read books on management, personal skills, new trends, technology, and where society is heading in general.

I think in another life, I would have been a statistician, because I enjoy how everything is connected by indicators and numbers. It may sound boring, but it's the same thing when people look for good credit card with good APR, or the national unemployment numbers that comes out first Friday of every month and how it could indirectly effect the next time you shop for financing for a new dental equipment, or how oil futures will effect local pump in few months - and how those savings impacts patients treatment acceptance, or what expiring tax laws could mean for your savings, etc. Its those little things that lead to little changes in my dental office. For example, Google bought a really promising thermostat-technology start-up last year or so, called Nest. I now have Nest in all my offices (and home) and manage it through my iPhone 6, for free, and on average reduced my energy bills by about 30%. A cost saving idea that you won't see getting published in most dental magazines or even hear someone mention it in national dental conferences. Another example is how a simple security camera system (with no monthly service fee) has a huge impact on employee efficiency, reduces embezzlement and downtimes in an office - again a remote technology available through smart phones.

You just have to love dentistry beyond chairside with a patient. For me, I see dentistry as a service that is fun and very profitable if you approach it the right way. New grads can't just assume their diploma is the key and the answer to all their dreams. They need to be as savvy in the real world, as they did to get their dental diploma.

 

[dentistinfuture]

I'm an avid follower of many non-dental related topics, from national and local politics, economics, to trends in small and large businesses.

Just curious as to where you seek out information on topics like this. I read the Business Insider online pretty regularly, but I want to broaden my knowledge base and look at some other sources. Any recommendations?

Also, how did you find out about Nest and other technologies? Much appreciated

 

[DentalDoge]

Just curious as to where you seek out information on topics like this. I read the Business Insider online pretty regularly, but I want to broaden my knowledge base and look at some other sources. Any recommendations?

Also, how did you find out about Nest and other technologies? Much appreciated

Not a business person nor a statistician but an avid follower of all Google products and services. I found out about Google's NEST acquisition because of a prtty funny NYSE article someone linked a while back. When Google acquired Nest Labs, people started trading NEST stocks...but that's not what Nest Labs is traded under. Instead NEST was a near bankrupted company called Nestor Inc. Nearly drove the NEST stock price up by 1,900%.

As for technologies, you can read articles on tech sites and magazine.

 

[syap]

A cost saving idea that you won't see getting published in most dental magazines or even hear someone mention it in national dental conferences. Another example is how a simple security camera system (with no monthly service fee) has a huge impact on employee efficiency, reduces embezzlement and downtimes in an office - again a remote technology available through smart phones.

How does HIPAA apply to security cameras/recordings, etc?

 

[DentalDoge]

How does HIPAA apply to security cameras/recordings, etc?

"In general, the issues that you have raised land into three different categories: 1) security related, 2) HIPAA/patient related, and 3) employee-employer related.

Although it can vary from state-to-state, use of surveillance video and/or cameras for security purposes, does not require permission of the person(s) as long as there is no audio. Typically, if there is audio, then permission is required.

Relative to HIPAA, any recording and/or dissemination of patient information requires patient permission. So the scenario you described would potentially represent HIPAA violations, if there is audio and the patient has not been informed or provided signed consent.

Regarding employee-employer relations, again if audio recording is going to take place, regardless of the reason (malpractice protection, embezzlement control, standards of care training, verbal skill development, etc.), then the person(s) being recorded must be informed beforehand, be given the choice to continue or not, and/or sign an agreement authorizing permission for the recording.

Employers should not coerce, pressure, or otherwise lead employees to believe that by not giving permission to record will result in disciplinary consequences."

SOURCE: http://www.rdhmag.com/articles/print/volume-33/issue-4/columns/workplace-videotaping.html

 

[Cold Front]

How does HIPAA apply to security cameras/recordings, etc?

I actually discussed this with my attorney before I installed the cameras.

The short story... Cameras should only be placed in areas where patient records (X-rays, charts, or any HIPAA related info) can't be seen through the cameras. So I ended up installing cameras out of view of those areas and computer screens, an in view of patient waiting room, hallways, steralization, staff room and doctor's private room (this an area where doctors can vulnerable when talking to emlloyees or patients in private).

Some interesting results after cameras were installed:

1. Employees was more attentive in general and kept themselves busy.
2. Less bathroom trips by staff.
3. Employee private meetings with doctors improved, specially during disciplinary action.

 

[deleted390966]

D) do not be fooled into IBR or PAYE. The quicker you pay off your debt now, the quicker your free. Debt is a poison, don't let anyone tell you anything different.

Can you elaborate on this a bit? What if PAYE enabled you to pay less in the end than other methods?

 

[CaliDDS1986]

Can you elaborate on this a bit? What if PAYE enabled you to pay less in the end than other methods?

Sure. The problem is IBR or PAYE will never enable you to pay less than the other methods long term. In the short term, yes because your payments are lower due to only paying a % of your income. In the long term you pay tax on whatever is left over so if you are only paying low amounts for 20-25 years, your tax bill will literally be a bomb the year that's it due that could equal an amount of a small mortgage in 1 year.

 

[Cold Front]

Just curious as to where you seek out information on topics like this. I read the Business Insider online pretty regularly, but I want to broaden my knowledge base and look at some other sources. Any recommendations?

Also, how did you find out about Nest and other technologies? Much appreciated

I read Business Insider too and other publications; from Fortune, Forbes, Money Magazine, Financial Times, to daily stuff like Wall Street Journal, The Economist, etc. You don't have to subscribe to or buy these magazines, just "Like" their pages on Facebook, and there will be tons of free and informative content that will be updating on your News Feed daily. Although some of those articles are click baits, most are just good reads and worthy of your time.

How did I find about Nest and other technologies? Again, I read technology sections in the above magazines, and there are tons of up and coming crowd-funding projects and products. Nest is now a household name, and I finally bought few last Black Friday when they moved beyond beta phase and fixed some issues with their first version. I also follow CES (Consumer Electronics Show) event in Vegas every year, that's another way to see new technology and when they will hit the market. This might all seem boring to some, but this is how I end up buying GE smart light bulbs which last 23 years for my home and can be controlled from an app on my phone - which saves me energy and future trips of purchasing 20+ light bulbs next couple of decades, and money too ($15 vs. $100's).

 

[johnhancock1]

Fools pay off their student loan as soon as possible. I agree with Bereno. Taking the safe route will only give you a comfortable life. To be great, it takes smart risk.

 

[StumpMT]

Fools pay off their student loan as soon as possible. I agree with Bereno. Taking the safe route will only give you a comfortable life. To be great, it takes smart risk.

How is this foolish? Because you can't take money with you so might as well have fun with life while you can?

 

[DentalDoge]

How is this foolish? Because you can't take money with you so might as well have fun with life while you can?

:troll:

 

[johnhancock1]

How is this foolish? Because you can't take money with you so might as well have fun with life while you can?

I should elaborate. I am simply saying I believe that focusing all your income on your student loans is safe and involves the least risk but it is not the smartest route. Paying the minimum will allow you to use your additional income to buy a practice quicker and if your practice it successful, the income you make will far outweigh any interest you saved by paying off your student loans quicker.

However, this route involves risk, but it is smart risk. It is not like gambling where the chances of you succeeding is low and based purely on luck. Having a a successful practice takes some luck but the success is somewhat within your control.

Yes, your practice can fail but lets arbitrarily say the chances of you being successful is 80%. A risk adverse person wouldn't take that bet, but I'd take it every time.

Hence, it is not a smart decision in a business sense to pay off your loans quickly. It is the right decision if you want to live a comfortable, safe life. But to be great (AKA maximize your earning potential), it's going to take some risk.

 

[InspiredDDS]

I should elaborate. I am simply saying I believe that focusing all your income on your student loans is safe and involves the least risk but it is not the smartest route. Paying the minimum will allow you to use your additional income to buy a practice quicker and if your practice it successful, the income you make will far outweigh any interest you saved by paying off your student loans quicker.

However, this route involves risk, but it is smart risk. It is not like gambling where the chances of you succeeding is low and based purely on luck. Having a a successful practice takes some luck but the success is somewhat within your control.

Yes, your practice can fail but lets arbitrarily say the chances of you being successful is 80%. A risk adverse person wouldn't take that bet, but I'd take it every time.

Hence, it is not a smart decision in a business sense to pay off your loans quickly. It is the right decision if you want to live a comfortable, safe life. But to be great (AKA maximize your earning potential), it's going to take some risk.

Are you saying that using your own income will put you at an advantage because you won't need a bank loan to open your own practice?

From what I understand, lenders look favorably upon a young dentist who has taken a large chunk out of his student loans during the first few years of practice.

 

[Ferneezy]

Are you saying that using your own income will put you at an advantage because you won't need a bank loan to open your own practice?

From what I understand, lenders look favorably upon a young dentist who has taken a large chunk out of his student loans during the first few years of practice.

the idea is that when you purchase/start a practice, you'll need to show lenders some liquidity. you build your personal reserves faster by shunting the least amount of money you can toward your student loan debt service.

also...your understanding is flawed and i suggest you simply call practice lenders. you'll learn they don't blink at edu debt in the half mil range and will gladly fork over another two, three, or four hundred thousand or more for your own gig.

dentistry is kind of a safe bet.

 

[jaa2031]

I should elaborate. I am simply saying I believe that focusing all your income on your student loans is safe and involves the least risk but it is not the smartest route. Paying the minimum will allow you to use your additional income to buy a practice quicker and if your practice it successful, the income you make will far outweigh any interest you saved by paying off your student loans quicker.

However, this route involves risk, but it is smart risk. It is not like gambling where the chances of you succeeding is low and based purely on luck. Having a a successful practice takes some luck but the success is somewhat within your control.

Yes, your practice can fail but lets arbitrarily say the chances of you being successful is 80%. A risk adverse person wouldn't take that bet, but I'd take it every time.

Hence, it is not a smart decision in a business sense to pay off your loans quickly. It is the right decision if you want to live a comfortable, safe life. But to be great (AKA maximize your earning potential), it's going to take some risk.

I am totally agree with you. If you don't want to buy the pracitce, I think it is good option to pay loan first, but if you want to buy the practice. You should save the money to buy the practice first then paying off your loan. Also, student loan is little bit more flexible to pay than other loan.(if you can't pay you can receive deferment in certain condition). Also you need to factor the inflation into your payment. The $1000 is far less worth in 20 years later. Also. you can receive tax deduction from your student loan interest. Paying student loan first is not a smartest option.