I will graduate with roughly ~240k in debt. Federal or private loans?

[LidocaineMane32]

I start dental school this summer and calculated that I’ll graduate with ~240k in debt. Should I use federal loans, private or both?

my plan is to use to Federal unsubsidized loans (20k yearly) and then the decision comes to either use the grad PLUS to cover the rest (tuition, living expenses, etc) or use private loans? I don’t really want to drag payments out for 20-25 years and then get hit with the tax bomb (federal Loan route). I think I’d rather utilize private loans with their lower origination fees and interest rates, and aggressively pay off my loans than the high fees/interest with the PLUS loan. Thoughts????

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[2thDoc11]

Federal loans until you're fully employed making 200k+ then refinance

240k is peanuts...... A lot of dental students would kill for that low of a debt

What about ~350k 😬

 

[LidocaineMane32]

I'm in the med field but have plenty of dental friends. 350k is high but not insane. >350k is where it becomes not worth it for dentistry IMO. (midwestern, nyu, usc @ 5-600k+)

With that being said if you choose to live in a state like Cali where avg pay is 130k and ~6-80k for COL then you're gonna be in for a nightmare but if you live in texas or the midwest (avg 200k - not considering working extra shifts) and COL @4-50k then it'll be smooth sailing

How are they approaching their loans?

 

[deleted903013]

240k is peanuts...... A lot of dental students would kill for that low of a debt

It's sad that a debt to income ratio of 2:1 is considered peanuts

 

[AONLINE]

With that being said if you choose to live in a state like Cali where avg pay is 130k and ~6-80k for COL then you're gonna be in for a nightmare but if you live in texas or the midwest (avg 200k - not considering working extra shifts) and COL @4-50k then it'll be smooth sailing

200k? Rural Midwest, maybe, but definitely not metro Midwest. Pay in big Midwest cities is more like 150-160k.

 

[2thDoc11]

Any knowledge about North Dakota? Lol thinking that’s where I will end up

 

[charlestweed]

The one with 450k COA moved to texas and is paying it down aggressively. The second one with 600k has her parents paying for most of it and the rest by future hubby (she's engaged to a doctor).

Both are smart moves. Instead of sitting there and whining about the high student debt, why not try to increase the income (and thus, improve the debt to income ratio) by moving to states that need dentists and by working 6 days/wk to pay down the debt as fast as possible. Another way is to marry someone, who also works hard and has a stable career….ie doctor, dentist, pharmacist, or optometrist, engineer, teacher, or someone who makes at least $50k a year.

 

[futuredebt]

Any knowledge about North Dakota? Lol thinking that’s where I will end up

Probably will do well. I'd prefer South Dakota for their zero income tax

 

[Cold Front]

the average in a lot of midwest cities is 180-220k. A family friend just graduated a few years ago in her 40s and made 175 her first year averaging ~35hrs/week. I'm sure a young and ambitious dentist could make even more. I took my aunt to a specialist for a root canal once and I was honestly shocked at how packed the office was. Think it was $1400 and ~45 min with a follow-up at a later date. Not rural at all. In fact, I've had trouble securing an appointment cuz they're always booked here.

Here’s How Much Money Dentists Make In Every State (forbes.com)scroll down to the table and sort by salary

Well, not to the burst the bubble here, but just because an office is busy and charging $1,400 per molar Endo, that may not say a lot on their bottom line numbers.

Experience factor: How many yrs did it take for that endodontist to be busy and have their fees at those numbers?

Office hours: How many days of the week is the office seeing that busy schedule? I work 3.5 days, and I’m busy. The schedule would be lighter if I worked 5-6 days a week.

Competition and referrals: Is that the only endodontist in the area? How many referrals feed the Endodontist office?

There is a lot of assumptions from a patient’s view. Specially when he/she is paying $1,400 on a single tooth. I’m sure some people would be enlightened by the numbers (or a similar situation) and could easily decide to apply to dental school.

 

[Cold Front]

It's sad that a debt to income ratio of 2:1 is considered peanuts

That doesn’t include personal debt. At its worst, it could easily be 10:1 debt to income based on debt I have seen.

 

[deleted903013]

That doesn’t include personal debt. At its worst, it could easily be 10:1 debt to income based on debt I have seen.

You’re certainly correct. Moreover, pre dents, most of whom have almost no financial experience, think that if they make 120k per year they’ll put all of it towards their student loans as if they won’t have taxes or other expenses like a family, house, car, etc.

 

[Cold Front]

You’re certainly correct. Moreover, pre dents, most of whom have almost no financial experience, think that if they make 120k per year they’ll put all of it towards their student loans as if they won’t have taxes or other expenses like a family, house, car, etc.View attachment 334015

I think the other lines on that chart will go up this year significantly.

Housing market is on fire, its a seller’s market and most homes won’t stay on the market for more than 1-2 days. There are currently about 1 million homes on the market today, and the are 2 million active real estate agents in this country. Insane. Price of timber, steel, labor, etc are all up. Not a welcome news for a new dentist with big student loans who is looking to buy an affordable home. $500-1M home mortgage is probably far more common now than ever before.

Auto prices also have gone up significantly the past 12 months. Dealers are not negotiating prices anymore because of the pent up demand and the global shortage of chips that caused some auto makers to close plants. Even used cars are selling at record prices. Not helping!

Bottom line. The world is getting more expensive fast due to inflation. Meanwhile, dentist income is stagnant at “Meh!” level - thanks to stubborn dental insurance reimbursement rates.

 

[deleted903013]

Housing market is on fire, its a seller’s market and most homes won’t stay on the market for more than 1-2 days. There are currently about 1 million homes on the market today, and the are 2 million active real estate agents in this country. Insane.

Homes in Montana don’t last 24 hrs. People from bigger and more expensive cities like LA are buying homes without ever even visiting them. I’ve heard native montanans can’t afford to buy homes in their home state. It’s crazy.

https://www.google.com/amp/s/www.washingtonpost.com/national/coronavirus-montana-escape-property-gold-rush/2020/10/20/9e36e858-0340-11eb-a2db-417cddf4816a_story.html%3foutputType=amp

 

[DentGent13]

I'm in the med field but have plenty of dental friends. 350k is high but not insane. >350k is where it becomes not worth it for dentistry IMO. (midwestern, nyu, usc @ 5-600k+)

With that being said if you choose to live in a state like Cali where avg pay is 130k and ~6-80k for COL then you're gonna be in for a nightmare but if you live in texas or the midwest (avg 200k - not considering working extra shifts) and COL @4-50k then it'll be smooth sailing

Unfortunately, 350k in terms of dentistry school is still cheap. That's like a low-medium priced state school post-interest or a pre-interest expensive state school.

 

[stumpdentist]

I start dental school this summer and calculated that I’ll graduate with ~240k in debt. Should I use federal loans, private or both?

my plan is to use to Federal unsubsidized loans (20k yearly) and then the decision comes to either use the grad PLUS to cover the rest (tuition, living expenses, etc) or use private loans? I don’t really want to drag payments out for 20-25 years and then get hit with the tax bomb (federal Loan route). I think I’d rather utilize private loans with their lower origination fees and interest rates, and aggressively pay off my loans than the high fees/interest with the PLUS loan. Thoughts????

For clarification, my understanding is that you only get hit with a tax bomb if you use the income-driven repayment plan (IDR). With the standard plan, it's just paying off loans.

Also, I think it's important to know what new dentists are making right out of school. This was recently released by the ADA...

 

[Cold Front]

Homes in Montana don’t last 24 hrs. People from bigger and more expensive cities like LA are buying homes without ever even visiting them. I’ve heard native montanans can’t afford to buy homes in their home state. It’s crazy.

https://www.google.com/amp/s/www.washingtonpost.com/national/coronavirus-montana-escape-property-gold-rush/2020/10/20/9e36e858-0340-11eb-a2db-417cddf4816a_story.html%3foutputType=amp

76 All-Cash offers on 1 home!

76 all-cash offers on one home. The housing madness shows no signs of slowing — CNN Business

Ellen Coleman had never received so many offers on a house in her 15 years of selling real estate.

apple.news

 

[yappy]

76 All-Cash offers on 1 home!

76 all-cash offers on one home. The housing madness shows no signs of slowing — CNN Business

Ellen Coleman had never received so many offers on a house in her 15 years of selling real estate.

apple.news

Flood the market with cheap money, artificially limit supply with zoning laws, taxes, and fees, then have all stake holders (banks, home owners, politicians, realtors) behave in a way to ensure that prices are maintained. We really need another 2008 correction.

 

[dentistrydmd]

Flood the market with cheap money, artificially limit supply with zoning laws, taxes, and fees, then have all stake holders (banks, home owners, politicians, realtors) behave in a way to ensure that prices are maintained. We really need another 2008 correction.

100% agreed

 

[P7898]

I dont understand $240k is not peanuts. It's a lot of money when you factor in taxes and life expenses.

 

[2thDoc11]

I dont understand $240k is not peanuts. It's a lot of money when you factor in taxes and life expenses.

It’s peanuts compared to what a lot of schools are charging when they are 400k+... saw a NYU post that mentioned they are 700k+

 

[yappy]

I dont understand $240k is not peanuts. It's a lot of money when you factor in taxes and life expenses.

I agree but taxes are much worse

 

[Cold Front]

With dentistry/medicine you sacrifice a few years and take on a ton of debt for the ability to earn $100-$350/hr. New salary surveys came out and OMFS is up there @ 550k median for example, even a new dentist can earn 200k+ fresh out of school if they live in the midwest or south (not middle of nowhere).

Ton of debt + interest is actually very bad. The repayments on the debt comes out of the post tax income, and the higher the repayment, the higher taxes required to pay that debt.

Also, there are all sorts of hidden cost associated with high debt. The student loan repayments are not tax deductible. The high debt and its repayments also impact the borrower’s ability to buy an affordable home (which is an oxymoron considering there is no such thing as affordable home in 2021 and in the foreseeable future). The higher debt also can effect the people around you; specially if you are married and have kids, which are also getting very expensive to have. Higher debt also doesn’t protect you from inflation - fuel cost, buying a car, cost of food, etc.

Bottom line, avoid debt at any cost. Whether you make $20/hr or $300/hr. Taking out ton of debt to make more income comes with additional fixed and variable costs.

 

[Cold Front]

And yet projections for average lifetime incomes for dentists/doctors far exceed and outpace the average college graduate earnings. This is average, this isn't even considering someone who works an extra shift or two or lives in a less desirable area (higher salary, lower COL). Not to mention there are Doctor home loans (now they even have them for PAs, DPMs, CRNAs) etc where you need 0% down, no PMI and a great rate. Not saying it's the way to go but it's there if someone needs it.

We have a family friend who became a dentist in her late 40s coming from a $50k/yr household and splurged on a $700k house, vacations, fancy cars in their first year. I'm not saying it's responsible but even if she has nothing to her name 20-30 years from now at the very least she hugely improved her life standards, got to enjoy her life, and put her children in great schools which will set them up to be successful. Maybe where I live is an exception but even the lowest-paid pediatrician here is earning $250k pre-tax and can live like a king on 60k.

This view/mindset is wrong. The smartest first move out of school is to leverage your dental degree to high income producing investment, like build or buy a practice. The biggest mistake is to get yourself into more “personal” debt to buy assets that don’t produce income (luxury cars and homes). Anyways, there are financial books and beyond on this advise, they all say - live within your means until you make more income, have more savings - and absolutely reduce your debt before anything else.

 

[yappy]

This view/mindset is wrong. The smartest first move out of school is to leverage your dental degree to high income producing investment, like build or buy a practice. The biggest mistake is to get yourself into more “personal” debt to buy assets that don’t produce income (luxury cars and homes). Anyways, there are financial books and beyond on this advise, they all say - live within your means until you make more income, have more savings - and absolutely reduce your debt before anything else.

It's wrong if you take the perspective that maximum wealth building should be optimized. However, that perspective places a lot of value on stored wealth which is an abstraction from reality. The phenomenalists would say that what really matters our experience while being. Despite their debt, they're living a very high quality of life. That may count more to them than stored wealth

 

[Cold Front]

It's wrong if you take the perspective that maximum wealth building should be optimized. However, that perspective places a lot of value on stored wealth which is an abstraction from reality. The phenomenalists would say that what really matters our experience while being. Despite their debt, they're living a very high quality of life. That may count more to them than stored wealth

People who focus on experience generally want instant gratification. Being happy at all cost is a very risky approach IMO.

 

[yappy]

People who focus on experience generally want instant gratification. Being happy at all cost is a very risky approach IMO.

Happy at all costs and wanting instant gratification are ideas you’ve introduced and are separate from what I said.

 

[Cold Front]

Happy at all costs and wanting instant gratification are ideas you’ve introduced and are separate from what I said.

That sounded grumpy! Different things matter to different people. I think being happy (or having high quality of life) is a state of mind. I’m not a shrink, but a lot of people probably suffer from keeping up with Joneses complex. Their view of high quality of life is through the lens of people around them or their culture. People at all levels of socioeconomics do often portray a life they necessarily don’t have. It’s a filter - the expensive home, cars, handbags, highly edited social media photos, etc are all tools to mask the self esteem for many people. It’s the feeling to be loved and validated by your company or even the world that counts for those individuals.

You can stick a fork in me now! lol

 

[yappy]

That sounded grumpy! Different things matter to different people. I think being happy (or having high quality of life) is a state of mind. I’m not a shrink, but a lot of people probably suffer from keeping up with Joneses complex. Their view of high quality of life is through the lens of people around them or their culture. People at all levels of socioeconomics do often portray a life they necessarily don’t have. It’s a filter - the expensive home, cars, handbags, highly edited social media photos, etc are all tools to mask the self esteem for many people. It’s the feeling to be loved and validated by your company or even the world that counts for those individuals.

You can stick a fork in me now! lol

I don’t think there is any reason to take my reply as grumpy. Even in this reply you’re subscribing motives that are not necessarily true and have drifted off into hyperbole to argue against a point I never made. Some people don’t optimize wealth and that’s okay. It’s not a strategy I favor but it’s not a question of morals or vices.