Loan Payback as a GP

[ucd2018]

Hey all,


I will be entering dental school in 2019 and was fortunate to matriculate to a state school. My COA over four years will be 300K. After graduating I plan to start working immediately. My question is, do many new grads have a challenging time finding work without a GPR/AEGD or is it pretty manageable to find an associate position without experience? Also, if one lives like a student while working, is it feasible to pay back these loans within a 5 year period? For reference I will likely be working in southern Nevada.

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[956139]

Hey all,


I will be entering dental school in 2019 and was fortunate to matriculate to a state school. My COA over four years will be 300K. After graduating I plan to start working immediately. My question is, do many new grads have a challenging time finding work without a GPR/AEGD or is it pretty manageable to find an associate position without experience? Also, if one lives like a student while working, is it feasible to pay back these loans within a 5 year period? For reference I will likely be working in southern Nevada.

This is what reading too much sdn will get you. The job market for dentists is one of the best job markets in the country. Relax, you'll be fine

 

[2TH MVR]

When I graduated from DS ..... It didn't make financial sense to pay off my DS loans quickly. Mine were very low interest loans. Instead.... I purchased a practice. Wait till you graduate and then you'll have a better idea on servicing your loans.

 

[TanMan]

Hey all,


I will be entering dental school in 2019 and was fortunate to matriculate to a state school. My COA over four years will be 300K. After graduating I plan to start working immediately. My question is, do many new grads have a challenging time finding work without a GPR/AEGD or is it pretty manageable to find an associate position without experience? Also, if one lives like a student while working, is it feasible to pay back these loans within a 5 year period? For reference I will likely be working in southern Nevada.

@2TH MVR is right. Paying off my student loans quickly in the beginning was one of the stupidest decisions I made. I don't think you need an AEGD/GPR to find a good associate position. Got a dental license and a pulse? Any corporate chain will hire you. Do they have corporate chains in southern Nevada?

If you really work hard, you could pay back the loans within 5 years. Question is, would you want to?

 

[RootRadar]

You will have a job for sure! And you will likely have a decent paying job right off the bat. The dental-working world is much different than the admittance-world you are used to when getting into college or dental school. Those that hire dentists into their practice, whether corporate or solo practice, rarely focus on grades and/or extracurriculars. They just want a dental professional who can treat and relate to their patients and work as a team. You will be surprised at how less "academic" the interview questions are.

As far as paying back student loans, it is certainly harder than it used to be a couple of decades ago as tuition continues to grow. But 300K as a dentist is still very manageable. Like what the above mentioned, paying off the loans first may not always be the best choice. Don't forget growing financially your way out of debt is also a good option.

 

[GypsyHummus]

Because paying off your student loans is a guaranteed 6-7% return on investment. Stocks and a dental business can always lose money.

Also, nobody can predict the future. What happens if something in your life causes you not to be able to work as a dentist? Your salary could go down drastically, and it is much better that your paid off those loans in 5 years instead of dragging it out to 20 but year 9 you can’t do dentistry anymore and have to find a teaching job for 40k/year.

In my opinion, better to pay it all off ASAP.

If you really work hard, you could pay back the loans within 5 years. Question is, would you want to?

 

[2TH MVR]

Because paying off your student loans is a guaranteed 6-7% return on investment. Stocks and a dental business can always lose money.

Also, nobody can predict the future. What happens if something in your life causes you not to be able to work as a dentist? Your salary could go down drastically, and it is much better that your paid off those loans in 5 years instead of dragging it out to 20 but year 9 you can’t do dentistry anymore and have to find a teaching job for 40k/year.

In my opinion, better to pay it all off ASAP.

I think what we're really trying to say is if you have two debts. A credit card at 18% and a student loan at 6-7% .... you should probably work on paying off the CC debt. If one debt is tax deductible (mortgage, business principal part of loan) and another is not .... well pay off the non-deductible loan faster. I would question your strategy if paying off your student loan in full causes you to defer practice ownership.

I was fortunate that my student loans totalled around 100K and they were around 5%. When I started practicing .... paying down my student loans was the last priority I had .... but of course my situation was different. 6 mos out of school .... I purchased (financed in real terms) 50% of an ortho practice. 18 months later I purchased the entire practice. 24 months later .... I financed a 2nd location. 5 yrs later ... I moved that practice to a larger facility (financed the new location). 5 yrs after that .... I financed the purchase of a 3000 sq ft office condo and built another practice. All during this .... I had a home mortgage and a 2nd home mortgage.

Sounds like a lot of debt. Sure it was. But all of it was investment debt, tax deductible and as of today .... I owed zero to very little on those investment debts when it came time to sell.

Yes .. pay off your student loan debt, but not at the sacrifice of waiting to purchase a private practice.

 

[charlestweed]

Because paying off your student loans is a guaranteed 6-7% return on investment. Stocks and a dental business can always lose money.

Also, nobody can predict the future. What happens if something in your life causes you not to be able to work as a dentist? Your salary could go down drastically, and it is much better that your paid off those loans in 5 years instead of dragging it out to 20 but year 9 you can’t do dentistry anymore and have to find a teaching job for 40k/year.

In my opinion, better to pay it all off ASAP.

I think paying off student loan ASAP is the next best thing to do if you don't want to take the risk in starting your own office. Not every dentist, who has his/her own office, is successful.

My plan after graduation was to work for someone else to pay off the student loan ASAP and then save money to start my own office. And that's what I did.....I started my own office after I had paid off around 75-80% of my student loan. I treated student loan like a "tax," which I could not avoid as long as I am still alive. Unlike Coldfront, Tanman, 2THMVR and most of my co-residents, who all had good business plans to open their own offices even before they graduated, I didn't have enough confidence in myself. So I took a slower (but safer) route and that was to work for a corp and paid off the student loan ASAP. I would be a few years ahead of where I am now if I started my own office and purchased a few investment properties (when they were much cheaper than they are now) sooner. I don't think what I did was a huge mistake because I didn't know that I had the ability to run a profitable practice. At least I got rid of the "tax" that I owed the government and not spent my money on things I couldn't afford.

When you owe a lot of in student loan (either because you attend a private school or because you have to spend extra $$$ to specialize), you only have to 2 choices:
1. Live like a student to save as much $$$ as possible for either starting an office or paying down the sudent loan debt.
2. Be less picky about the job offers and work 7 days/week so you can afford to have nice things while trying to pay off the debt.

I did the option 2. People want to work less so they can spend time to travel to see the world to relieve stress. I relieved stress by getting rid of debts.....and trying to become financially independent ASAP. I felt good everytime I wrote the last check to pay the bank. I want to make lots of $$$ so I can drive a nice new car every 2-3 years and live in an expensive zip code. I don't need to travel a lot since I already live in the best country in the world.

 

[321931]

Buy a strong practice. Pay off the loans within 5 years. Pay back the practice within 7 years. Pay off the house within 10 years. Contribute to your 401k and max it out every chance you get. Use any spare savings to invest in the stock market preferably mutual funds.

Congrats debt free before 40, and can retire by 50-60.

Way easier said then done though. But I like to keep things simple and to the point.

 

[TanMan]

Because paying off your student loans is a guaranteed 6-7% return on investment. Stocks and a dental business can always lose money.

Also, nobody can predict the future. What happens if something in your life causes you not to be able to work as a dentist? Your salary could go down drastically, and it is much better that your paid off those loans in 5 years instead of dragging it out to 20 but year 9 you can’t do dentistry anymore and have to find a teaching job for 40k/year.

In my opinion, better to pay it all off ASAP.

It's a valid way of looking at things, but a very conservative approach to financial success. Stocks and dental businesses can fail, but working as an associate (foregoing owner potential and years of ownership) may cost you a lot of money in the long term. Under the conservative formula of focusing on student loan debt first, future dentists may not be able to justify going into dentistry since the lifestyle will be slightly above average and retirement age will be 50-60+. The earlier you are willing to venture out on your own, the more potential income you stand to make. However, if your office fails, you will be deeper in the hole. That's why I think it's better to be conservative if you're starting out older, v. if you were younger and have more room before you hit your projected retirement. You have a lot more leeway in terms of making errors when you are younger.

Point that I'm trying to make: make your money when you're still young, invest in what can make you the most money right now (dentistry), then diversify your holdings out of dentistry so you're not so dependent on dentistry. I know it is tempting to try and pay off your debt as soon as you can because the payments are affecting you now, but if you are able to juggle your current income stream/leverage your current assets to start an office in a non-desirable area that most of your colleagues don't want to work, you should be able to get out of all your debt (and get all the perks/financial rewards) a lot faster than if you were to pay off all your student loan debt, then working your way up. I remember when my student loans were about 2200+ per month. In terms of associate income, it takes a large chunk. When it comes to procedural income/practice income, that 2200 is about 2 rct/bu/crown (after expenses).Why the hell are we trying to aim for net worth = 0 (assume you're going to put all money to student loans, live with parents, have no assets, etc...), when we should be trying to maximize our net worth and income streams?

 

[Cold Front]

Hey all,


I will be entering dental school in 2019 and was fortunate to matriculate to a state school. My COA over four years will be 300K. After graduating I plan to start working immediately. My question is, do many new grads have a challenging time finding work without a GPR/AEGD or is it pretty manageable to find an associate position without experience? Also, if one lives like a student while working, is it feasible to pay back these loans within a 5 year period? For reference I will likely be working in southern Nevada.

Your probability of finding an associate job as a new graduate is 100%. The probability of finding such job in a city you would like to live and at an office that will fit all or most of your needs is 50% or less. Expect a lot of corporate recruiters calling you every day once they get hold of your cell phone number. You will be owing more than $300k after compounding interest and origination fees and tuition increases while you are in school. So double check your numbers, some of those costs may not be until you are a 2nd, 3rd and 4th year dental student. I would safely estimate between $350-400k.