$$ Military vs Private Practice Salary Info $$

[Flakbait9]

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Hey guys (and girls), I was a finance major in undergrad, and have made a pretty massive Excel spreadsheet to calculate the Net Present Value of taking a military scholarship compared to going into private practice with student loans. The spreadsheet is posted a couple of posts below.

First, remember that no dentist is going to make $200k straight out of school. The median dentist salary is like $130k, and while it's easy to get (much) higher than that eventually, most starting dentists make $90-$100k. But, the beauty of Excel is that you can change one number and it will recalculate everything, so you can plug whatever you think you can make.



Scenario 1: Out of state / private school tuition. This is when a military scholarship is a financial no-brainer. You will easily save a quarter million dollars.
Assuming $250k in student loans, you will need a private practice salary of $248,000 STRAIGHT OUT OF SCHOOL to break even, once you account for the lack of debt and nearly $100k of stipends the military gives you while you're in school. Obviously there is just no way.

Same scenario, different perspective. Assuming you made $110,000 a year straight out of school in private practice with loans, the military option would still have a positive Net Present Value of $217,000. NPV means the excess value in today's dollars; all cash flows have been discounted to the present.


Scenario 2: In State / scholarship tuition. Even here the military is competitive.

With $140,000 of student loans, you would still have to make over $190,000 straight out of school to break even. That's just not going to happen. Making a more realistic $110,000 straight out of school, the military generates a positive NPV of $146,000.

Scenario 3: Parents paying for school / full scholarship

You lucky few have it made, but frankly I wouldn't like the strings attached that come with your parents giving you money well into your twenties (just my opinion). Even with a full academic scholarship, you could easily have 70k in debt for cost of living while in school. Amazingly, because of the stipend money, the military still generates a positive NPV in this scenario.


After all that, I don't think ANYONE should join the military just for money. There are lots of aspects of the military that many people dislike, while others love it for the same reasons. Financial information should just be used to quantify data so you can make informed decisions. I'm on an Army scholarship because I think it will be a rewarding and unique life experience; anyone who chooses it solely for the money is probably making a mistake.

 

[BQuad]

What do you mean by "break even"? Do you mean that after 4 years when your payback is up you'd be done paying off your loans or that's when you would have a net?

You are definitely right, don't choose a military scholarship just for the money or you will be miserable. There are some intangible rewards of treating troops that can't be expressed in dollars.

Also to attach a file, hit the "Reply" button, then below where you type your message there is a frame that says "Additional Options", in there is a button that says "manage attachments". A pop-up will come up hit "browse" choose your file, then hit "upload" and you're done.

 

[Flakbait9]

By "break even," I mean that you would require that annual salary to match the sum of the benefits that a military scholarship offers. It was poor word choice, sorry about that. You should be able to pay your bills either way. 🙂

Enjoy!!

 

[navdoc47]

Without affirming or disputing your figures, other things to consider:

1) opportunity cost of delaying building up your practice by 5 years (assuming you don't buy one outright).

2) what your pay would be as a civilian contractor compensated for practicing 6+ months at a time in the Middle East or stuck within the bulkheads of some ship. Other luxurious accomodations include living out in the field w/the Marines where your toilet consists of digging a hole with a shovel. And instead of going indoors when the weather is uncomfortable, you'll get to experience being either too cold, too hot, and/or too wet. And don't expect to call a helo in to bring Dominos when you're tired of eating packaged food (MREs/trayrats).

Here's a photo of a trayrat:



Bon appetit !!

 

[Flakbait9]

Looks Yummy 😉

Acutally, I've been working on another Excel spreadsheet that takes that opportunity cost into account; it compares cash flows generated by both paths (just staying in the military 4 years then getting into private practice vs. straight into private practice) over an entire career until retirement at 65. It's harder, because there are more variables about salary, salary growth, etc. But the military stills comes out ahead. I'll post it if I have time to finish.

I totally hear everything you're saying, though. I'm sure the military can be a huge pain at times. On the flip side, I have a friend who graduated dental school and is working at some huge practice making tons of money to repay her loans, but is getting worked to death and it is just a massive race to produce as much as possible each day. She is burned out and hating it.

There's no free lunch, you can just pick how you want to pay, so to speak.

 

[iLuvDAT]

military dentists get to have normal work hours with a paid vacation and great benefits. here( NYC ) most graduates end up getting paid $400 a day w/o any benefit, and at the end of year your boss simply gives you a 1099 not even a W2. others get paid by production which is a rat race. anyway it is hard for new graduates with no experience to have a 12K job fresh out of school and most of them will probably work like a slave for their first few years, not to mention that military can get you bypass mandatory GPR requirement in NY and DE. Taxwise, your 4 years salary is split into 8 year(stipend),which qualifes you for a much lower tax bracket for the entire period. flakbait9, maybe you wanna take student loan deduction into consideration for being a civilian dentist. loan deduction could be a big deal if you were in a high tax bracket.

 

[Flakbait9]

Taxwise, your 4 years salary is split into 8 year(stipend),which qualifes you for a much lower tax bracket for the entire period.

Hey iLuvDAT, could you expound on that quote? I havent heard that, but i hope it's true! A large part of your income is not taxed, is that what you're referring to?

I deducted interest payments from the loans (see the private practice salary data page). Essentially the interest paid decreases the taxable income dollar-for-dollar. I taxed the whole amount first then added back the interest in the end (that's how we did it in class). I assumed a 30% tax bracket, but you can change that.

I did find a stupid cell error that changed the values a little. It increases the civilian salary a little, but didnt change the overall results much at all. I have edited the spreadsheet to reflect the change.



FYI:
Also, military officers qualify for a $20,000 VERY low interest loan (2% to 4%, supposedly) from USAA; while in the reserves in school, it is available halfway through your Junior year, and you don't have to begin repaying it until you go on active duty. if used wisely, it could be very beneficial as well.

 

[KOM]

FYI:
Also, military officers qualify for a $20,000 VERY low interest loan (2% to 4%, supposedly) from USAA; while in the reserves in school, it is available halfway through your Junior year, and you don't have to begin repaying it until you go on active duty. if used wisely, it could be very beneficial as well.

Hadn't heard that...I'll have to look into this. Thanks!

 

[goosestuff]

FYI:
Also, military officers qualify for a $20,000 VERY low interest loan (2% to 4%, supposedly) from USAA; while in the reserves in school, it is available halfway through your Junior year, and you don't have to begin repaying it until you go on active duty. if used wisely, it could be very beneficial as well.

I **HEART** USAA!!! They are a great company, and anyone who qualifies for membership should take advantage.

 

[PJDent]

yeah, I took the 25k at 2%. You'd have to be crazy not to. You can put it into their money market account and earn 5% on it and actually make money on the deal.

 

[pretzeldude66]

How would I go about getting this 2% loan? I've seen posts about getting a pre-commissioning loan that must be obtained by a month or so after commissioning, but I haven't seen anything about one starting the middle of Junior year. I'm on a 4 year USAF HPSP and missed out on the precommissioning loan, so this new chance would be awesome!

 

[PJDent]

Call USAA and tell them you are HPSP and you go active when you graduate. I think they'll hook you up.

 

[KOM]

.

 

[ORTHODON]

Hi!
just wondering, Are non US citizens (FTD's) eligible to join US military and get scholarships for their international DDS program?

 

[BQuad]

You must be a US citizen to serve as an officer in the Army.

Foreign trained US citizens are required to complete an international DDS program from an ADA accreditted school before active duty.

It is not the usual route but the HPSP may be available for an International DDS program if you were a citizen before you applied for it. You would have to check with a recruiter.