Interest payments after dental school

[student2121]

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Out of curiosity I was calculating the monthly interest payments I'll be owing at the end of my 4 years, close to $6000 a month at 2.5% prime! How is it possible to pay back such a huge sum of money?! Do dentists really take home over 6000$ a month starting out?

 

[Zubnaya Feya]

Out of curiosity I was calculating the monthly interest payments I'll be owing at the end of my 4 years, close to $6000 a month at 2.5% prime! How is it possible to pay back such a huge sum of money?! Do dentists really take home over 6000$ a month starting out?

It is possible to pay loans back. It totally depends on how long you want to pay the loans for. 6000 a month is a lot unless you really want to pay the loans back in under 10 years.

 

[student2121]

It is possible to pay loans back. It totally depends on how long you want to pay the loans for. 6000 a month is a lot unless you really want to pay the loans back in under 10 years.

Im not sure where you got your loans from but from any bank I was under the impression during repayment your required to pay back the principal and interest at the same time.

 

[armorshell]

Out of curiosity I was calculating the monthly interest payments I'll be owing at the end of my 4 years, close to $6000 a month at 2.5% prime! How is it possible to pay back such a huge sum of money?! Do dentists really take home over 6000$ a month starting out?

Sounds like you calculated wrong. To have to pay 6000/month on your loans, the terms would have to be a $550,000 loan paying off over 10 years, or a $1,000,000 loan payed off over 30 years, and that's including interest AND principle.

 

[student2121]

Sounds like you calculated wrong. To have to pay 6000/month on your loans, the terms would have to be a $550,000 loan paying off over 10 years, or a $1,000,000 loan payed off over 30 years, and that's including interest AND principle.

Ok I'm a little confused now (I'm new to the whole banking system). It's probably a dumb question but when a bank has say prime at 2.5% does that mean you pay 2.5% yearly of what you owe divided into 12 seperate payments for each month? That would be a huge relief! Thank you.

 

[BillytheEchidna]

Ok I'm a little confused now (I'm new to the whole banking system). It's probably a dumb question but when a bank has say prime at 2.5% does that mean you pay 2.5% yearly of what you owe divided into 12 seperate payments for each month? That would be a huge relief! Thank you.

It is good that you are asking! Interest is what the bank charges you for the privilege of using their money. It has to be worth their while somehow, so they charge you a percentage of the money that they lend to you. You don't necessarily pay it all every month, but it accrues... If you borrow $100,000 at 2.5% (by the way, just because they say this is the prime rate does not mean you will qualify for it. A more realistic rate for student loans is 6%) and pay it off over the course of a year, you will have paid an extra $2500 in interest, so $102,500 total. Usually, your first few payments will only go towards interest -- not even touching the principal until the interest has been paid down. This is a simplification, of course, because your balance will go down with each payment (so the $2500 is just a simple estimate), but you will pay a lot more interest at the beginning of the repayment period (when your balance is $100,000) than you will towards the end (when your balance is $10,000). The higher the amount of money you borrowed, the more interest there will be, the longer it will take to pay off the interest and whittle down the principal... As someone else pointed out, the term of your loan will be 10, 20, 30, etc. years, so you can imagine that a lot of interest can accrue over 30 years. The amount of your monthly payment will be set by how much you owe, and how long you want your repayment period to be. You can pay it off sooner by paying all of your interest every month. In the U.S., a good portion of money paid towards student loan interest is tax deductible.

 

[xhamburgersamx]

When you take out a normal loan, the repayment process will already be set up via how long you wish to take to pay off the loan. Whether its 5 years or 30 years, the bank will set up a monthly payment amount which includes interest for you.

Some loans allow you to pay more than the set amount scheduled each month, others do not. Ideally, you would want to pay off as much as possible in the shortest amount of time. With huge dental school loans, your min. monthly payments are probably going mostly to paying down the interest rather than the principle balance.

I highly doubt anyone pays $6000/month to their loans. The more realistic number is $2000-3000/month

 

[doc toothache]

http://mortgage-x.com/calculators/amortization.htm

 

[supraman]

Unbelievable that you will most likely pay in interest the same as the loan if you do like a 30 year

 

[Slack3r]

Can you finance over like 50 years? I'm going to end up paying back over a million once it's said and done. 🙁

 

[BillytheEchidna]

Can you finance over like 50 years? I'm going to end up paying back over a million once it's said and done. 🙁

How do you figure? Do you have a huge amount of undergrad debt or something?

Try not to let the prospect of a lot of debt be too discouraging -- it's kind of a fact of life if you're pursuing a career as a dentist. Apparently, getting in is the hardest part.

 

[student2121]

.

 

[Slack3r]

I'll have about $75k from ugrad. Then depending on where I go for dental school, another $300k. That's $375k, financed over a long loan period, I'll end up paying close to a million after interest.

 

[bucknut2009]

When you take out a normal loan, the repayment process will already be set up via how long you wish to take to pay off the loan. Whether its 5 years or 30 years, the bank will set up a monthly payment amount which includes interest for you.

Some loans allow you to pay more than the set amount scheduled each month, others do not. Ideally, you would want to pay off as much as possible in the shortest amount of time. With huge dental school loans, your min. monthly payments are probably going mostly to paying down the interest rather than the principle balance.

I highly doubt anyone pays $6000/month to their loans. The more realistic number is $2000-3000/month

Depending on your interest rate, you may not want to be paying back as much as you possibly can above and beyond the set monthly payment. You want to remember that paying the student loan off is important and obviously you want to make the entire payment each month but after that you want to make sure that you are paying yourself first before making additional contributions towards the loan.

 

[doc toothache]

I'll have about $75k from ugrad. Then depending on where I go for dental school, another $300k. That's $375k, financed over a long loan period, I'll end up paying close to a million after interest.

You may end up paying a heck of a lot more should you end up buying/building your own practice for about $500K not to mention a house which is going to set you back at least 250-500K. Welcome to the real world.

 

[Zubnaya Feya]

You may end up paying a heck of a lot more should you end up buying/building your own practice for about $500K not to mention a house which is going to set you back at least 250-500K. Welcome to the real world.

House and practice can wait though. Besides, although it is a uncertain thing to rely on, still, you will get married and your spouse will have some income as well. It is not as bad as it seems.

 

[doc toothache]

House and practice can wait though. Besides, although it is a uncertain thing to rely on, still, you will get married and your spouse will have some income as well. It is not as bad as it seems.

Assuming the spouse doesn't come with excess baggage.

 

[Dentgirl09]

This might sound niave... but with how much money you are constantly paying how do people live a comfortable life?? Sounds crazy...... I guess that's why you pick a profession you actually like!

 

[ArmyDDS2013]

Well i'm doing the military hpsp route. I think semi suffering for 4 years is worth a million dollars.