How much debt is okay?

[Potential123]

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Okay I know I've been posting a lot in various forums, but I was wondering how much debt is "good" debt. I am a NJ resident and come from a low-income family to begin with. How much debt is feasible to pay off after one graduates? I've seen some schools collectively cost 292k, however, I saw UPR about 20k a year.

 

[zackc19]

Zero debt is best. What is acceptable is up to you. It's an investment. Only you can determine what is too much.

 

[PAyankee]

Around 250K for dental school is about as high as I'd go. Any more than that and you are really playing with fire. The real killer is the interest. At 7% for student loans you are looking at around 17k every year, just in interest.

 

[Shnurek]

I'd say 100k for opto and 150-200k for dental/medicine. People have to realize they can't really sell the diploma back lol. At least with a house mortgage if things go awry you can always sell the mortgage because you have a physical object you are paying for and not a piece of paper. Don't get tied down to something you don't know if you might hate in the future. Work as a technician or assistant for a year or two before diving in.

 

[SoulPower]

If you're really in debt, you can do the IBR and wait til the bubble pops.

 

[hockeykspiky]

If you're really in debt, you can do the IBR and wait til the bubble pops.

What happens to us (DDS who owes 500k in student loans) when the bubble bursts??

 

[Shnurek]

What happens to us (DDS who owes 500k in student loans) when the bubble bursts??

Better hope we print out a boatload of more money. Pray for hyperinflation!

 

[DMDWANNABEE]

What happens to us (DDS who owes 500k in student loans) when the bubble bursts??

I imagine you would be at the mercy of the government. They hold your undischargable debt, and so I would think they decide how to let you out from under it. I would be worried about having such a high salary when they draft a method to equitably decide whose debt will be forgiven, and to what degree. I could see a tiered system emerging, seeing as those worried about it already bring up such a system from time to time.

The benefit to the bubble bursting seems like it would go to the students a taking out debt a short while after the burst, not those already invested. Right?

 

[jay47]

Around 250K for dental school is about as high as I'd go. Any more than that and you are really playing with fire. The real killer is the interest. At 7% for student loans you are looking at around 17k every year, just in interest.

Yes, the real killer is the interest. The real question that I have all the time is, how can you go into dental school and get into debt 4 times what your yearly salary will be?

NYU/USC after interest, youll have ~$450,000-$500,000 in debt.
Count on an average salary of about $120,000 a year after you graduate and throw in the very high cost of living in those areas, and I just don't know how you can justify it.

Think about it, if you go to an average public university and pay $80,000 for a degree (with living expenses included) in say engineering or business. You'll come out the first year making probably $50,000-$70,000. That's not a bad ratio ~ 3/4.
Poor students at these schools on the other hand are coming out closer to 1/4. Interest is a real bitc* at $500,000 and MUCH MUCH more difficult to handle.

 

[John117]

When will the bubble burst? The cost of higher education, and in particular graduate schools, seems to be increasing like clockwork with no signs of slowing down...

 

[Frank22]

The way out of debt is the way in. Get yourself deeper in debt after graduation by purchasing a practice immediately. If you purchase the right practice for the right reasons your student loans won't be an issue; you should be able to retire your debt within a few years. However if you're like many other recent graduates you'll look for "the perfect job" that doesn't exist while the interest on your debt compounds. Dentists that take the latter route can take up to 10 years to pay off their student loans, if not more.

 

[SoulPower]

The way out of debt is the way in. Get yourself deeper in debt after graduation by purchasing a practice immediately. If you purchase the right practice for the right reasons your student loans won't be an issue; you should be able to retire your debt within a few years. However if you're like many other recent graduates you'll look for "the perfect job" that doesn't exist while the interest on your debt compounds. Dentists that take the latter route can take up to 10 years to pay off their student loans, if not more.

I think the problem with that is, it takes a bold person to think they can run a practice and make it profitable their first year out of school. All most people know is dental school not the intricates of business.

 

[Frank22]

I think the problem with that is, it takes a bold person to think they can run a practice and make it profitable their first year out of school. All most people know is dental school not the intricates of business.

I agree that confidence is a great trait to have, but recall that purchasing a practice is not an expense, it's an investment. If a dentist buys the right practice for the right reasons they can reasonably expect to make $200,000 to $250,000 their first year in practice. An income that large immediately out of school should be sufficient to retire their entire educational debt within three to five years. On the other hand, consider the dentist that works as an associate and makes about $90,000 their first year, $100,000 their second, and so on and so forth. They can spend over 10 years gnawing away at their debt little by little. The fact is that by owning a general practice a dentist can make income from both their hygienists and a good margin of their own production, while as an associate they can only make a small percentage of their collections (usually after laboratory expenses), and commonly on poor quality insurance patients.

 

[Thaxil]

I don't this it was a matter of confidence but of logic. I graduated with about 300K of student loan debt in 2008, and bought practice straight out. Financing was the hardest part with the financial world crashing. I mentioned it was more logic than anything else because I reasoned that as an associate no one is going to teach you the ropes of managing a practice. Yes you may learn from observation. Second, I figure that if I failed, I would just end up where everyone else is working for someone for some year before I try again.

 

[Frank22]

I don’t this it was a matter of confidence but of logic. I graduated with about 300K of student loan debt in 2008, and bought practice straight out. Financing was the hardest part with the financial world crashing. I mentioned it was more logic than anything else because I reasoned that as an associate no one is going to teach you the ropes of managing a practice. Yes you may learn from observation. Second, I figure that if I failed, I would just end up where everyone else is working for someone for some year before I try again.

I'm also under the impression that purchasing a practice put you years ahead of the majority of your classmates in terms of income.

 

[senpai]

If you ask Obama, no amount of debt is too much.

 

[suarez 7]

I don’t this it was a matter of confidence but of logic. I graduated with about 300K of student loan debt in 2008, and bought practice straight out. Financing was the hardest part with the financial world crashing. I mentioned it was more logic than anything else because I reasoned that as an associate no one is going to teach you the ropes of managing a practice. Yes you may learn from observation. Second, I figure that if I failed, I would just end up where everyone else is working for someone for some year before I try again.

Do you think you could tell us more about your experience buying a practice with 0 business skills, and how long it took you to start making money? How did you learn to manage a practice without the knowledge? What was your salary like your first year?

 

[Thaxil]

Do you think you could tell us more about your experience buying a practice with 0 business skills, and how long it took you to start making money? How did you learn to manage a practice without the knowledge? What was your salary like your first year?

I have been doing this for four year and I would not be able to run a practice without my staff. I bought a practice that had a very experienced staff which can float to different positions within the office. Seriously, the office runs itself. Everyone knows their job, I just pay the bills. I am trying to learn some of what they do. The only business skill I know and what has worked for me is to treat people right and fairly. I don’t make a great deal of money, most of what I make goes to playing loans for the business, the office property, home mortgage and 24K a year in student loans. I live modestly. I have one car between my wife, son and I. We take one vacation a year. I invest heavily into marketing and practice equipment and other things. In 7 years, maybe I will be rolling in the dough, but I will take on more debt to expand or something.