Should I just not apply to any private schools? 400-500K debt seems like a poor financial decision.

[A Pre-dent]

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[Incis0r]

isn't there some way to remove some of the personal burden of a practice loan, like by incorporating the practice or something? I don't really know much about this.

I wish. Unfortunately, practice loans are made out to S-Corp or LLC, but the bank frequently requires a personal guarantee to issue the loan to you. This means you waive your limited liability and are responsible for the loan.

 

[A Pre-dent]

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[BioDoc]

Don't forget that interest accrues during school too. So it is not just the sum of the tuition + cost of living. It is the sum plus the interest accrued during school.

I think the thing that sucks the most is that you gotta pay it back with AFTER-TAX dollars. 120k Gross Salary in Cali is only $76,113.00 after taxes. The interest alone per year on a 350k loan is $23,940.00. That leaves you with $52,173.00 for malpractice insurance, living expenses, and then you finally get start deducting from the 350k principal of the loan.

 

[Incis0r]

Don't forget that interest accrues during school too. So it is not just the sum of the tuition + cost of living. It is the sum plus the interest accrued during school.

I think the thing that sucks the most is that you gotta pay it back with AFTER-TAX dollars. 120k Gross Salary in Cali is only $76,113.00 after taxes. The interest alone per year on a 350k loan is $23,940.00. That leaves you with $52,173.00 for malpractice insurance, living expenses, and then you finally get start deducting from the 350k principal of the loan.

And you didn't even take funding retirement into account yet.

 

[Streax1]

Edit: a pre-dent said it better again 🙂

Marriage is a compromise (which I'm sure you already know). I know I would work at least part time if my husband needed me to, and I hope he would do the same for me. That's basically what I meant. I really didn't mean to offend you or your family!

Gotcha. I think I was just misunderstanding what was being said. I personally don't want my wife to have to work, that's certainly a partial reason why I chose this profession. But of course if we were about to start defaulting on our mortgage, my wife would definitely be willing to go work.

Sent from my XT1096 using SDN mobile

 

[darklordzz]

I hope mom and dad are OK with me living in their house until I'm 35. Maybe 40! I'll buy the groceries and hire a housekeeper for them.

 

[Ollivander]

@Ollivander , you are SO lucky to have an in-state dental school. Very jealous.

Does UAB show any preference for residents of different states, or does it treat all OOS applicants the same? According to the ADEA book, it has no preference for legal residents of any state, yet all OOS enrollees are from Southern states near Alabama?

They usually always take ~80% IS students and 15-20% OOS. The OOS students are always more often than not regional applicants. If you got in from elsewhere in the country then you must have strong ties to UAB or amazing stats.

 

[Ollivander]

Its crazy. How could you pass that option up? If you have a a ton of debt, at least that can cut a big chunk of it. You're also serving a population of people that NEED care. There are usually options state by state for loan forgiveness in exchange for working in public health. There ARE good programs out there, it's just not all rainbows and Ferraris a couple years out of school.

Could you possibly provide some links to the NHS programs for loan forgiveness? Are these options usually cutthroat and competitive or can anyone do it? Thanks in advance.

 

[Ollivander]

All of you guys are so awesome. I appreciate each and every one of you who replied in this thread. You've given me so much more perspective and it's really made me take a step back and re-strategize how I'm going to go about applying over the next cycle or two (before and after the SMP). You've all been so help and I'm very grateful for it.

 

[Incis0r]

Could you possibly provide some links to the NHS programs for loan forgiveness? Are these options usually cutthroat and competitive or can anyone do it? Thanks in advance.

Ask and ye shall receive: http://www.ada.org/~/media/ADA/Educ...es/dental-student-loan-repayment-resource.pdf

 

[Ollivander]

Mathematically, it's a fine approach, but now we're talking about being $800K+ in debt (assuming $300K for a practice) before even seeing the first patient. That's a very big burden to have.

What would you say the best route is if one wishes to own their own practice and has 300-500K in debt? Pay off the school debt before taking on the debt of a dental practice?

 

[Incis0r]

What would you say the best route is if one wishes to own their own practice and has 300-500K in debt? Pay off the school debt before taking on the debt of a dental practice?

There are various different schools of thought on this.

If you can stomach debt, then generally the financially advisable way to go is to lower your minimum payments by extending your student loan term for up to 30 yrs, use the freed up income towards the down payment of purchasing a practice (thereby greatly increasing your cash flow), and then use the greater income to destroy both loans.

If you can't stomach much debt (like me, for example), then the financially advisable way to go is to pay off the student loans quickly- either through loan repayment programs (NHSC or the ones I linked in the previous post) at underserved communities, corporate dentistry, etc.

All depends on what lets you sleep well at night.

 

[Scumbag_Steve]

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[Ollivander]

Yes. I will contribute to this thread more tomorrow when I'm on a PC instead of phone. If you care about my opinion that it

Most definitely. I'm taking into consideration all of the advice given in this thread, so anything you think would be helpful would be great because I read and dissect everything posted.

 

[Joey333]

What would you say the best route is if one wishes to own their own practice and has 300-500K in debt? Pay off the school debt before taking on the debt of a dental practice?

Well, I'm most likely going to end up at BU this fall and will have around 360k before interest. Luckily I'm walking into an established practice, so I don't need a loan for that. Honestly, I'm thinking of either the loan repayment through NHS, or just working at the practice while living home for a few years with minimal expenses. This way I can just throw most of my salary on the principle each year to make it manageable and finally move out haha. Oh boy, I'm glad I'm young. I think if you can put a lot of your money into the principal you should as it saves you loads in interest as well. We'll be fine guys, money management is key. You don't need to start your own practice either, look to join an older dentist and eventually take it over. Keep the hope!

ALSO, paying back your loan bi-weekly instead of monthly can shave a couple years off. It's amazing how the interest adds up, so that's definitely a strategy I'd think about.

 

[dentalcpa90]

What would you say the best route is if one wishes to own their own practice and has 300-500K in debt? Pay off the school debt before taking on the debt of a dental practice?

Go on IBR, work for 1-3 years, save up some capital, and open up your own practice. You will be in massive debt but if your practice is thriving then you will be good. It is a risky path though, but rewarding if you can make it.

 

[saintguitar]

Let me first say that I am in no way downplaying the burden of student loans. It is a real problem and a perfectly legitimate concern.

But just hear me out.
If you do not care where you end up for the next 4 years of dental school, the headache of taking the licensure exam for the state where you want to practice, and just want to spend as little money possible on the tuitions and etc, then yes apply only to the cheapest schools.
But if you want to maximize your chance of becoming a dentist sooner than later, please consider private schools as well.
Believe or not, there are many scholarships out there that can help you either paying off your student loans or just completely pay for your education and more, such as HPSP, NHSC, so on and so forth.

Also ADA is really trying hard to negotiate a better interest rate on the student loans so the students can focus more on the education part than how to go about paying off the loans.

Good luck!

 

[Scumbag_Steve]

[.

 

[Incis0r]

With projected tuition increases, fees and other chicken**** charges, living expenses, and interest accrued in school I have you graduating from UAB with $207,200 of debt.

Need anything else just let me know. Best of luck brotha!

Yes- I need you to tell me something very important. How do I become a resident of Alabama right now?

 

[Incis0r]

But if you want to maximize your chance of becoming a dentist sooner than later, please consider private schools as well.
Believe or not, there are many scholarships out there that can help you either paying off your student loans or just completely pay for your education and more, such as HPSP, NHSC, so on and so forth.

Also ADA is really trying hard to negotiate a better interest rate on the student loans so the students can focus more on the education part than how to go about paying off the loans.

Good luck!

Thanks for sharing your insight.

I personally agree with you on the first point: if you want to become a dentist at all costs and money is not a consideration, then consider the privates.

The second point you made is also accurate, but I want to clarify something. HPSP now is ridiculously competitive. This year, the Army, which is the least selective of the three branches, waitlisted and rejected applicants with 3.8 GPA and 22DAT. (If you don't believe me, head over to the military dentistry forums and check it out). Think about that for a moment. It's harder to get into the Army than to get into several state schools now. The Air Force only has ~15 4-year HPSP dental scholarships/year now.

NHSC is even more competitive. These scholarships aren't the easy ones they once were a few years back, where you were "matrix-qualified" and guaranteed a scholarship if you had a 3.5 GPA and a 20DAT (this was the case in the Air Force before). Not true anymore.

Furthermore, loan repayment is slowly drying up. This is what I am hearing from several dentists out in practice. If you want to do NHSC loan repayment, that's an option, but that also is getting more competitive as more and more students graduate with obscene amounts of student loans and request funding.

Finally, on the third point- I'm glad the ADA is doing something about interest rates, but this is not an issue anymore. Thanks to several refinancing firms, such as Social Finance, you can refinance your loans to 3-4% quite readily. Of course, the negative here is that you will no longer qualify for IBR/PAYE/PSLF by refinancing with a private lender.

Take-Home Message: If you're a pre-dent with a state school, jump on that opportunity if you get it. It's your best chance to reduce financial headaches for your future self.

 

[Joey333]

So let's look at cost only first. With projected tuition increases, fees and other chicken**** charges, living expenses, and interest accrued in school I have you graduating from UAB with $207,200 of debt. It's important to note that I have projected all of your loans to be unsubsidized Stafford, meaning you have the lower interest rate of 5.84%. I didn't calculate your origination fee, but it's going to make only a small increase in your balance compared to the 4% origination fee that the Grad Plus loans would from another school. We'll get into that later. So for UAB, if you wanted to repay your loans in the following amounts of time, this is what your monthly payments would look like.

5 years- $3,990.36 w/$32,221.57 of interest paid over the life of your loan
6 years- $3,418.27 w/$38,915.86 interest
7 years- $3,011.02 w/$45,726.19 interest
8 years-$2,706.79 w/$52,651.88 interest
9 years- $2,471.23 w/$59,692.71 interest
10 years- $2,283.73 w/$66,847.98 interest

Now let's take Louisville, just as an example that you had used earlier in the thread (also a decent example because it as a more OOS friendly public than some others). With rounding, unsubsidized Stafford covers around $47,000 per year. So that means that you'll be on the hook for pretty much that amount once more for the GradPlus, which has the 4% origination fee and the 6.8% interest. So, without taking into account inevitable tuition increases and going off what you have based on your table, with interest accrued during school and your origination fees you're at $446,000 of debt coming out of Louisville.

SIDE NOTE: anyone who wants explanation of these calculations just ask and I'll post them. I know $446,000 for Louisville seems too high but it's not.

So here's your Louisville repayment plan

5 years- $8,589.29/mo w/$69,357.21 interest
6 years-$7,357.87/mo w/$83,766.60 intersect
7 years-$6,481.26/mo w/$98,425.83 interest
8 years-$5,826.39/mo w/$113,333.79 interest
9 years- $5,319.34/mo w/$128,489.25 interest
10 years- $4,915.76/mo w/$143,890.41 interest

Let's say you get lucky and as an associate in a state with no state income tax you're making $150,000 a year. Let's also assume you're married with one child (both of which decrease your tax burden), and your wife makes $50,000 while being debt free (another assumption that would help you out. Of your household's $200,000 of income, you keep $164,000 of it. In order to pay off Louisville in 5 years, you would have to live off of $61,000 a year. If your wife didn't work or you were single, you'd live off of $11,000 a year. Louisville's 10 year would have you living off of $105,020 a year, or $55,020 a year if you are a one income household. However, you would be paying $74,000 extra in interest over the life of the 10 year as opposed to the 5 year.

Now let's use the same situation with UAB. You would live off of $116,120 a year or $66,120 if single income for the 5 year plan. On the 10 year you would live off $136,596 or $86,596 depending on wife status, with only $34,000 extra in interest.

So as you've said, your desire is eventually to own your own practice. These numbers pretty much put to rest the "one year not in school means one year of lost income" argument of going to a private school this cycle vs UAB next cycle. By going to a private school over UAB, you're losing much more than a year's worth of income. Hell, if you're doing the 10 year plan (which I don't recommend,but it might be your best bet down the road given your situation), it's possible that you'll be losing a year's worth of post-tax income IN INTEREST ALONE when comparing the two options.It is financial suicide to attend a private school if it's not your only option, given your scenario of wanting to open up your own GP office. You would be better off just going military and borrowing the loans to borrow the practice once you're out.

Now, this is not to say you should only apply to UAB. As others have correctly stated, this is too risky. My advice is to put your best foot forward, whether it be 2017 or 2018, whenever you're the ready, and apply to UAB and the private schools that are cheapest/ OOS publics that reclassify tuition that are most friendly to OOS applicants.

Rasheed Wallace says "ball don't lie". Well, I say, numbers don't lie.

Need anything else just let me know. Best of luck brotha!

Great post, I really think it all depends on where you end up working. There is big money in rural practices, and you may have to sacrifice living in a less than desirable town to get your loans down. At the end of the day you're still practicing dentistry. Looking around and finding a practice that's in need of a dentist (and possibly taking it over in the future) in key. It's the harsh reality of a lot of new dental graduates, but you WILL be okay. Our generation of dentists have to accept that gratification is more delayed than it ever has been. An associate dentist is also going to recieve raises, and that will factor into how aggressive they pay their loans (slashing interest as well).

You can write the interest off on your taxes for your student loans too can't you? Especially if you do a 10 year plan, you get a lot of that interest you pay back?

 

[allantois]

Can I just say that my hypothetical nurse is not marrying a dentist and isn't moving to a rural area either 😀

 

[Scumbag_Steve]

[,

 

[Ollivander]

So let's look at cost only first. With projected tuition increases, fees and other chicken**** charges, living expenses, and interest accrued in school I have you graduating from UAB with $207,200 of debt. It's important to note that I have projected all of your loans to be unsubsidized Stafford, meaning you have the lower interest rate of 5.84%. I didn't calculate your origination fee, but it's going to make only a small increase in your balance compared to the 4% origination fee that the Grad Plus loans would from another school. We'll get into that later. So for UAB, if you wanted to repay your loans in the following amounts of time, this is what your monthly payments would look like.

5 years- $3,990.36 w/$32,221.57 of interest paid over the life of your loan
6 years- $3,418.27 w/$38,915.86 interest
7 years- $3,011.02 w/$45,726.19 interest
8 years-$2,706.79 w/$52,651.88 interest
9 years- $2,471.23 w/$59,692.71 interest
10 years- $2,283.73 w/$66,847.98 interest

Now let's take Louisville, just as an example that you had used earlier in the thread (also a decent example because it as a more OOS friendly public than some others). With rounding, unsubsidized Stafford covers around $47,000 per year. So that means that you'll be on the hook for pretty much that amount once more for the GradPlus, which has the 4% origination fee and the 6.8% interest. So, without taking into account inevitable tuition increases and going off what you have based on your table, with interest accrued during school and your origination fees you're at $446,000 of debt coming out of Louisville.

SIDE NOTE: anyone who wants explanation of these calculations just ask and I'll post them. I know $446,000 for Louisville seems too high but it's not.

So here's your Louisville repayment plan

5 years- $8,589.29/mo w/$69,357.21 interest
6 years-$7,357.87/mo w/$83,766.60 intersect
7 years-$6,481.26/mo w/$98,425.83 interest
8 years-$5,826.39/mo w/$113,333.79 interest
9 years- $5,319.34/mo w/$128,489.25 interest
10 years- $4,915.76/mo w/$143,890.41 interest

Let's say you get lucky and as an associate in a state with no state income tax you're making $150,000 a year. Let's also assume you're married with one child (both of which decrease your tax burden), and your wife makes $50,000 while being debt free (another assumption that would help you out. Of your household's $200,000 of income, you keep $164,000 of it. In order to pay off Louisville in 5 years, you would have to live off of $61,000 a year. If your wife didn't work or you were single, you'd live off of $11,000 a year. Louisville's 10 year would have you living off of $105,020 a year, or $55,020 a year if you are a one income household. However, you would be paying $74,000 extra in interest over the life of the 10 year as opposed to the 5 year.

Now let's use the same situation with UAB. You would live off of $116,120 a year or $66,120 if single income for the 5 year plan. On the 10 year you would live off $136,596 or $86,596 depending on wife status, with only $34,000 extra in interest.

So as you've said, your desire is eventually to own your own practice. These numbers pretty much put to rest the "one year not in school means one year of lost income" argument of going to a private school this cycle vs UAB next cycle. By going to a private school over UAB, you're losing much more than a year's worth of income. Hell, if you're doing the 10 year plan (which I don't recommend,but it might be your best bet down the road given your situation), it's possible that you'll be losing a year's worth of post-tax income IN INTEREST ALONE when comparing the two options.It is financial suicide to attend a private school if it's not your only option, given your scenario of wanting to open up your own GP office. You would be better off just going military and borrowing the loans to borrow the practice once you're out.

Now, this is not to say you should only apply to UAB. As others have correctly stated, this is too risky. My advice is to put your best foot forward, whether it be 2017 or 2018, whenever you're the ready, and apply to UAB and the private schools that are cheapest/ OOS publics that reclassify tuition that are most friendly to OOS applicants.

Rasheed Wallace says "ball don't lie". Well, I say, numbers don't lie.

Need anything else just let me know. Best of luck brotha!

This post was nothing short of amazing. Thank you very much Steve. The burning question on my mind as the summer approaches is should I apply to only UAB this cycle, and 15-25 schools next cycle after I complete my SMP? I'll have a much stronger chance of gaining acceptance into UAB after the masters is completed and they have a year's worth of grades to go by (assuming I do well which I plan on doing). Whereas if I were to apply to 10-15 schools this cycle, there's a chance I could be accepted somewhere but the likelihood of that somewhere being UAB is low due to my sGPA and the fact I have SEVERAL withdrawals in science courses. I'm hoping to shed the doubt brought on by those withdrawals and below average sGPA by doing the SMP. By only applying to UAB this cycle I would essentially put myself in a position where the only two outcomes are either attending UAB in the Fall of 2017 or reapplying in the Summer of 2017 to 15-25 schools including UAB based on acceptance/rejection. I'll sit back and listen.

Note: The withdrawals were later followed up by mostly A's and some B's, however I have 11 withdrawals and 9 of them are sGPA related. I think that creates doubt as to whether or not I can handle a rigorous science based curriculum and hence why I'm doing the SMP.

 

[Incis0r]

@Joey333 @Scumbag_Steve

Student Loan Interest Tax Deduction, Per IRS Regulation, can be claimed. There is a limit to the amount you can deduct, however- You can only claim up to $2,500 in deductions for student loan interest. The interest on a 7%, $400,000 loan is $28,000, so you can see that this is not an effective mechanism for writing off interest.

Furthermore, there is an income limit. If you are single, this deduction is phased out after you exceed an adjusted gross income of $80,000. If you are married and filing jointly, this deduction is phased out after you exceed an adjusted gross income of $160,000.

For more information, see the IRS website at: https://www.irs.gov/publications/p970/ch04.html

 

[Scumbag_Steve]

,

 

[Scumbag_Steve]

.,

 

[Ollivander]

The burning answer on my mind, as someone who didn't really have a similar situation to you but did have the "do I apply this cycle or wait until next cycle" dilemma, is that I 100% advocate waiting the cycle out until your SMP is good to go. I wanted to go to dental school straight after graduating in 3 years, but I decided to wait out a gap year during what would have been my conventional "senior year", and this was effective because schools saw my upward trend and entire slew of undergrad grades. They wouldn't have had I applied the previous (Class of 2019) cycle. I truly believe this decision got me into my top choice. If you get accepted to only an expensive school you can't turn it down without very legit extenuating circumstances. Then you're stuck with the payback. Apply to 10ish schools after killing the SMP to give yourself the best chance. This eliminates both the "you only applied to one school, you must want to come to UAB more than you want to be a dentist" train of thought, which is certainly out there in adcoms, and the "well **** I have to go to this private school because I can't turn down their acceptance in search of greener pastures next year" situation which happens.

All your eggs in the 2018 cycle basket (which means applying in June 2017). Do everything you can to kill the SMP, do more volunteer work, more shadowing, retake the DAT if you need to (I don't know your score of GPA). Just put your best foot forward that 2018 cycle. That way, if your best application gets rejected by UAB, you know you did all you can do and never have to wonder what if. You can go to the private school knowing there's nothing more you could have done. On a more optimistic note, UAB will see how far you've come and accept you.

Thanks for the advice! I appreciate it more than you'll ever know. I do think I will apply to UAB and a handful of schools that won't amount to an absurd amount of debt this cycle though. The reasoning behind that is this; I believe if I apply to UAB and am rejected which I sort of expect, I can then apply to them in the 2018 cycle and display to them how I've improved and that I'm not willing to give up just because I got rejected once. If they have to go through my application at least once and give me a secondary application (all IS students get one) they'll become familiar with my name and when they see it again in the 2018 cycle I can stand a stronger chance of being accepted. I'll have a SMP under my belt at that point. But I plan on applying to 10 or so schools this time around after your advice mostly to put the notion to rest you brought up where it looks as though I want to go to UAB more than I want to be a dentist. It'll mostly be comprised of schools like WVU (low OOS tuition), schools I can claim residency after a year, or schools that are a reach that I sort of expect to be rejected from but stand a chance at nonetheless like Michigan. Another reason I'm doing this is because I'm a bit older than the traditional grad as I just turned 24 this month.

 

[Ollivander]

All of you have helped me so much and I think I've finally come to a decision to apply to a smaller amount of schools this cycle, and hold off applying to privates until my SMP is completed during the 2018 cycle. I appreciate all of the advice in this thread. I want to say this is probably the most informative thread I've read on this forum since finding it in 2011, and joining/posting within it since 2012. You guys have really helped me make a major decision that will greatly impact my life for the better and I want you all to know that I greatly appreciate it. I'm grateful for the time you took out of your day(s) to not only help me based on my situation, but hopefully provide others in the future valuable information about choosing dental schools and the importance of that financial decision and obligation. If anyone in this thread, or that sees this thread in the future, feels the need to reach out for advice, information, or help don't hesitate to message me as I plan to always be a part of this forum.

 

[Scumbag_Steve]

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[Ollivander]

Even though Auburn sucks and I have no idea why Bruce Pearl took the job there, let us know if you need anything else brotha

Haha will do! They actually landed a five star in this class (Mustapha Heron) and have two in 2017's class (Austin Wiley, Davion Mitchell) which shocks me. We could seriously make the tournament next year or the year after which blows my mind. We got lucky being the only school at the time to offer Pearl a power five job honestly. I just hope he sticks around.

 

[doktorinprogres]

Mathematically, it's a fine approach, but now we're talking about being $800K+ in debt (assuming $300K for a practice) before even seeing the first patient. That's a very big burden to have.

It's a big burden to have but if you're afraid of debt the dental profession is going to be a rough road for you. The quickest way to solvency with the kind of student loans we're talking about is a high cash-flow practice. Also unlike student loans the money you pay towards your practice loan builds equity.

 

[Incis0r]

It's a big burden to have but if you're afraid of debt the dental profession is going to be a rough road for you.

There are several career paths in dentistry.

 

[allantois]

It's a big burden to have but if you're afraid of debt the dental profession is going to be a rough road for you. The quickest way to solvency with the kind of student loans we're talking about is a high cash-flow practice. Also unlike student loans the money you pay towards your practice loan builds equity.

Ultimately, that's how I imagine students are justifying taking on 400,000-500,000+ of debt. However, median associate income is 120k, while median practice owner makes under 200k. It's all up to whether you believe you will be able to do much better than most dentists. Kind of like casino; although some of us are more risk aversive.

 

[distressstudent]

It's like I am reading the same posts over and over again. I have made my share of long calculation posts more than I can count.
We keep crunching the numbers over and over again, and it gets worse as the years go by.
Unless people really start to internalize that student debt means a lifestyle adjustment and sacrifice, it will continue to be just a number

 

[Ollivander]

It's like I am reading the same posts over and over again. I have made my share of long calculation posts more than I can count.
We keep crunching the numbers over and over again, and it gets worse as the years go by.
Unless people really start to internalize that student debt means a lifestyle adjustment and sacrifice, it will continue to be just a number

Unfortunately I cannot view your profile. You must have it private. I was going to view your previous content and find where you've done your calculations if you don't mind.