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Lovin' this patriotism!
Freedom isn't free.![]()
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I was unaware of the $90,000+ income threshold. But I'm not sure where you are getting the double tax from. Can you elaborate? But even with the threshold, assuming that you are taxed only on any income over 90k, that would still be a pretty good deal imo. If your income over there is around 120k (it would probably be more because you have a US degree, which is highly respectable), then getting taxed on 30k+ isn't so bad. Keep in mind that this threshold doubles if you have a spouse.
I'm not sure what it's like in Europe.
Ohh gotcha. I thought you meant the US would tax you twice the normal rate lol. I'm pretty sure income taxation by Middle Eastern countries is nonexistent, based on what some of my relatives that work there tell me. I'm not sure what it's like in Europe. But thanks for informing me, definitely some food for thought.
Simply because there are many people who take out mortgages that are more than that. Now, why wouldn't I be taking on a debt of that size when I'd be making $100-200k? Simple cost benefit analysis, gets even better over time.
Simply because there are many people who take out mortgages that are more than that. Now, why wouldn't I be taking on a debt of that size when I'd be making $100-200k? Simple cost benefit analysis, gets even better over time.
Put another way, if you work five days a week, consider that you're working Mondays and Tuesdays just to pay the government.
Mortgages are secured by the property; if things get too tight, you can sell the property and walk away.
Student loans are not dischargeable in bankruptcy. They will follow you around for life.
Mortgages are taken out on properties, and properties can be income-producing assets- they can produce income for you 24/7 if you rent them out.
Student loans grant you the ability to get an education, but strictly speaking, your dental education will only bring you income if you a) get a job and b) work at the job. It's not an "investment" in the sense that real estate is.
Mortgages you get an actual house, and people usually don't mortgage a house unless they have a good source of income already. If you take on 450k debt you are paying 5.3K out of your paycheck every month if you do the 10 year repayment. Its not as simple as go out, get job after D-school.
1. Tell that to the 2008 crisis.
2. Yes, renting out and producing a profit on top of your mortgage is as easy as one-two-three. Especially for houses in which you take out a $450k+ loan, you'll never be profiting on rent
Yeah, all those damn government roads, transportation regulations, public school systems, waste sanitation, water treatment, health programs, veterans benefits, unemployment/social security/disability programs, science funding like NIH, military, and national and state park preservation. 😉
> Its not as simple as go out, get job after D-school.
Yes it is. It's literally one of the easiest to go and get a job. With a mortgage, you get an actual house. With a dental degree, you get a life time return on your investment.
I have been saying this for a long time ago.
The issue isn't whether they are willing or not. The real answer is that they just don't care. There is a serious issue with apathy towards their own finances.
All I can say is that for good or bad, it seems like most dental students are very optimistic people.
I understand; there's a lot to complain about. Our system is not perfect. But it's pretty damn good, all things considered.
I have to disagree with your numbers.Of course, but for a good while you wont be living in luxury. Many folks believe they could rev up lambos and buy penthouses the moment they get out. Lets say you earn 150k( which imo is still on the high side), you will take home approx 100k. Now lets factor in that $5.3K a month to payback loans. Thats $63,600 per year. 100k-63k= 36.4k after taxes. Thats ramen noodle salary. Especially in high cost areas like NYC/Cali/Philly.
Of course there are pay raises etc etc(wont be much as an associate). But unless you buy your own practice (500k extra) you wont be making that 200k+. And goodluck paying back 450k + 500k . You will get destroyed in debt. That last 500k is going to be private debt with crazy interest rates.
Are you ready being someone in his mid twenties/early 30s trying to run his own practice paying back 10.5K$ a month in just loans? $10.5k x 12= $126,000 a year.(If you intend on paying back in 10 years, if not you will be paying almost 1.86 MILLION for a 25 year loan. Thats almost an entire MILLION on top of what you originally borrowed) Now what about paying rent? What about paying your dental assistant(another 50k?) Dental insurance? All those certifications and licenses? You WILL get overwhelmed quick if all you are thinking is "go out and get paid". There is a lot of budgeting going on.
So yeah, It is not as easy as go out and get job and live life. You will have to budget like a wolverine to set yourself off nice for the future.
I have to disagree with your numbers.
33% right off the bat from gross at 150K is not realistic. The tax system is so complex that there are many deductions available, as well as systems in place if people take the time and make the effort to find them, or find someone who knows them.
There are also strategies to reduce debt, legal and ethical. Using your example of 150K starting, let's say you start work from July 1st of your grad year. That puts you at $75K in income for that year. Your tax liability is significantly lower for the year. You are also in your grace period before your interest capitalizes, so if you can leverage those 6 months to attack that interest, the financial benefit is substantial.
WRT your point on opening a business, even if you ARE a million in debt, it's an investment. It won't get the cash rolling in unless you know HOW to work the business. A lean model, maximizing economies of scale, and a whole lot of hard work can very quickly get you out of debt. Also keep in mind that as a business owner with practice and student debt, your income generated will be significantly more than your MAGI. This results in more tax relief, which keeps you in business.
It is a risk/reward scenario. I completely agree with your point that people need to know what they are getting themselves into, but it's not a doom and gloom scenario. Earning that DDS/DMD itself isn't going to be the cash cow, it's how you use it. I'm not a grad yet, but I believe that we truly will know very little about dentistry on our graduation day. It'll take time, it'll take research, and mentorship and networking.
If NYU, USC, and the other high priced schools were really setting people up for failure, a lot less people would apply.
Obviously less debt is better, but there are plenty of people out there who graduated with a higher debt, tacked on practice debt, and are still doing better than some of their peers who went to a state school for less than half the cost.
You make good points.Oh I never said it was doom and gloom. And I agree that it is doable as long as you are on top of everything. Too many people don't do their research and reach out.
My numbers aren't perfect in that post, as it does not factor in a lot of things that can significantly reduce the level of debt.
I was trying to make my point that it's not as easy as "graduate, get a job and ur good to go" like that poster kept reiterating. The 150k is also unrealistic as most people do residencies and only make 50-60k their first year. Which means the grace period would be over by the time the real work starts. Most starting is 100-120k
One of the golden rules back then was never to take on more debt than your first year salary. Now we are breaking it 3-4 X fold.
I want to specialize, I'm going to work hard, and I know it will happen. I won't stop until it does.
Of course, but for a good while you wont be living in luxury. Many folks believe they could rev up lambos and buy penthouses the moment they get out. Lets say you earn 150k( which imo is still on the high side), you will take home approx 100k. Now lets factor in that $5.3K a month to payback loans. Thats $63,600 per year. 100k-63k= 36.4k after taxes. Thats ramen noodle salary. Especially in high cost areas like NYC/Cali/Philly.
Of course there are pay raises etc etc(wont be much as an associate). But unless you buy your own practice (500k extra) you wont be making that 200k+. And goodluck paying back 450k + 500k . You will get destroyed in debt. That last 500k is going to be private debt with crazy interest rates.
Are you ready being someone in his late twenties/early 30s trying to run his own practice paying back 10.5K$ a month in just loans? $10.5k x 12= $126,000 a year.(If you intend on paying back in 10 years, if not you will be paying almost 1.86 MILLION for a 25 year loan. Thats almost an entire MILLION on top of what you originally borrowed) Now what about paying rent? What about paying your dental assistant(another 50k?) Dental insurance? All those certifications and licenses? You WILL get overwhelmed quick if all you are thinking is "go out and get paid". There is a lot of budgeting going on.
So yeah, It is not as easy as go out and get job and live life. You will have to budget like a wolverine to set yourself off nice for the future.
I have to disagree with your numbers.
33% right off the bat from gross at 150K is not realistic. The tax system is so complex that there are many deductions available, as well as systems in place if people take the time and make the effort to find them, or find someone who knows them.
There are also strategies to reduce debt, legal and ethical. Using your example of 150K starting, let's say you start work from July 1st of your grad year. That puts you at $75K in income for that year. Your tax liability is significantly lower for the year. You are also in your grace period before your interest capitalizes, so if you can leverage those 6 months to attack that interest, the financial benefit is substantial.
WRT your point on opening a business, even if you ARE a million in debt, it's an investment. It won't get the cash rolling in unless you know HOW to work the business. A lean model, maximizing economies of scale, and a whole lot of hard work can very quickly get you out of debt. Also keep in mind that as a business owner with practice and student debt, your income generated will be significantly more than your MAGI. This results in more tax relief, which keeps you in business.
It is a risk/reward scenario. I completely agree with your point that people need to know what they are getting themselves into, but it's not a doom and gloom scenario. Earning that DDS/DMD itself isn't going to be the cash cow, it's how you use it. I'm not a grad yet, but I believe that we truly will know very little about dentistry on our graduation day. It'll take time, it'll take research, and mentorship and networking.
If NYU, USC, and the other high priced schools were really setting people up for failure, a lot less people would apply.
Obviously less debt is better, but there are plenty of people out there who graduated with a higher debt, tacked on practice debt, and are still doing better than some of their peers who went to a state school for less than half the cost.
If I were you, I would either pull back my acceptance or do the military route. I obviously don't know your financial standing, but if you have to take out the maximum needed, then you're looking at close to $450,000-$500,000. That's before your wonderful interest rate of 6.21 or 7 21% is even considered.
Have you sat down and calculated what your payments would need to be after you graduate to get out of debt? I was accepted to NYU when I applied, and just for sh*tz and giggles, I wanted to see how much my loan payment would be after I graduated. Well, without boring you too much, if I took out the maximum amount needed to cover everything I needed to get through school at NYU, and pay off the debt in 10 years, then I would have had to pay, get this, $6,3000/MONTH. That's over $75,000/year JUST in student loans. Let's say that after you graduate you do really good and start making $120,000/year right when you get out. Well shoot there is income tax, that will knock you down to roughly about 85-95k/year depending on what state you live in. Oops, can't forget about those student loans! Now you're left with 10k/year. You see the problem? For you to live a very frugal life off of 50k/year after loans, then you would have to make over $200,000/year right out of school. Again, do you see the problem? You simply can't pay back your loans after you graduate if you decided on a 10 year fixed payment plan.
You would have to pay back your loans for over 30 YEARS in order for your monthly payments to be relatively reasonable of about $2,700/month. Obviously, going this route and extending your pay period only adds to the total amount of interest accrued. For me, if I were to go to NYU, take the full amount needed to go to school there, and pay it back over 30 years, then it would have costed me, counting interest, by the time it was all said and done, just over $1,000,000. And that's just your student loans! I'm sure that someday, you might want a house, your own private practice, and a few kids that will suck you dry of money.
Needless to say, if you go to NYU and don't do the military route, then you WILL be a slave to Uncle Sam for decades.
Your interest accrues based on your principal/loan while in school and grace period. You can make payments on your interest at any point. They are two separate debts. After your grace period, the interest capitalizes, giving you one debt.Your loan is capitalizing the whole time you are in school.
I know that question wasn't directed to me, but if I were to take a wild guess on that one, I would say no because you are still considered a full time student. Some residencies require tuition, which would require additional loans and the cycle would just continue past the four years.@schmoob that is awesome! Wow this makes me feel quite happy. Thank you!
@whaleofatale , does the interest on a direct unsubsidized loan capitalize during a dental residency?
I know that question wasn't directed to me, but if I were to take a wild guess on that one, I would say no because you are still considered a full time student. Some residencies require tuition, which would require additional loans and the cycle would just continue past the four years.
Your interest accrues based on your principal/loan while in school and grace period. You can make payments on your interest at any point. They are two separate debts. After your grace period, the interest capitalizes, giving you one debt.
Long story short, you do not accrue compound interest until after the grace period.
While this is better, accruing interest on a 100k/yr loan is not a good situation.
Also, where are we suppose to find money to pay towards the growing interest?
I'm down.Like many many people have said earlier, we moonlight as male strippers at night![]()
We don't have to pay the interest that accrues while in school, it's an option though. Everyone's situation is different. Some people can do it, others cant. For example, some may have a suga mama that can afford to help reduce our debt.While this is better, accruing interest on a 100k/yr loan is not a good situation.
Also, where are we suppose to find money to pay towards the growing interest?
Make the best laughing gas money can buy.Debating on going full out Walter White
Make the best laughing gas money can buy.
@DentalLonghorn2014 , I think you also may like this informative, balanced post that WildZodiac made:
@schmoob that is awesome! Wow this makes me feel quite happy. Thank you!
@whaleofatale , does the interest on a direct unsubsidized loan capitalize during a dental residency?
They probably don't have enough money for laptops or even wifi... I can't imagine how someone can handle those costs from those schools.I wish we could get some opinions on some fresh grads (graduated within the past 2-3 years) from schools like NYU, USC regarding the debt and their plan of paying it off.
My girlfriend started her own company and got rich by 25, so I'm fully expecting her to sugar mama my debt.
Shes obligated to pay for my dental loans because I watch the Bachelorette with her and cook dinner every night.
Depends on the programSo this might be a dumb question, but do you receive a stipend during residency for a specialty? Or do you pay tuition? Or... both??
Bachelorette IS the catch. Have you ever forced yourself to watch that show? It's like 2 straight hours of the Top Gun volleyball scene.Surely, there's a catch.
Bachelorette IS the catch. Have you ever forced yourself to watch that show? It's like 2 straight hours of the Top Gun volleyball scene.