Student Loans = Slavery: see the numbers at 1-9% for yourself

[Bobby Fischer]

...Worst case scenario and the US goes the way of Greece: I'll go back to my home country in Eastern Europe where they wont extradite me for not paying the loans. Just kidding I would never do that!

anybody got a list of countries that are safe safe from the long arm of student loan tyranny?

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[Ferneezy]

Do you guys see anything wrong with this financial picture/plan?

Debt:

$200k total education debt @ 6.7% interest on 4 year repayment = $221,328.84 total
Total Interest paid = $21,328.84

Monthly payment: $6,148.02

Income

120k per year
Monthly net (with 2 fed allowances and no other deductions): $7,748.96

[Monthly Net Income] - [Monthly Loan Payment] = 1600.96.

why would you want to do this? what are you doing to feed an interest-bearing retirement account?

where do you plan on living, while living on $1600/mo?

 

[Bereno]

Threads like this is why it is so bad for young, impressionable predents to visit. These numbers are based on paying back in 30 years. Rarely does anyone ever do 30 yrs unless thy have an unbelievablely low refinance rate. Most people pay it off between 10 to 20 yrs. which is considerably less cost overall.

Plus, work your butt off in college and get accepted to a school where the tuition is cheaper so you don't even have to worry about $350,000 in student loans.

I totally agree. They see these numbers and get freaked out without looking into things further.

Do you guys see anything wrong with this financial picture/plan?

Debt:

$200k total education debt @ 6.7% interest on 4 year repayment = $221,328.84 total
Total Interest paid = $21,328.84

Monthly payment: $6,148.02

Income

120k per year
Monthly net (with 2 fed allowances and no other deductions): $7,748.96

[Monthly Net Income] - [Monthly Loan Payment] = 1600.96.

That is much too aggressive to do so safely. That, and your interest rate is a little low (I would imagine it to be in the 7.5% ballpark conservatively). I would pay on a 25 year plan for the first 3 years or so, then increase your pmts enough to pay it off in another 3-5 years. Much more doable plan if you want to be aggressive (and that plan is aggressive lol). If it were me, I would just set up the 25 year pmt plan and use the rest to buy a practice...

As an aside, I cannot replicate your numbers, so I am not sure how you determined your total principle and pmt. Principle seems low to me, and pmt seems high lol

 

[dentalWorks]

*scratching head*

So... whats the point of this thread? I thought the options are easy, don't like tuition prices? Apply to army scholarship or don't apply to dental schools at together.

 

[yappy]

Where I live 1600 post tax is very doable/middle class. My logic in not giving to a retirement account is that 6.8% interest would wipe out any 1-3% gain.

Bereno, point taken. It is aggressive; but, I feel like the 4 year time frame is a good goal. The loan payment numbers were calculated by the same on line calculator Bobby referenced.

why would you want to do this? what are you doing to feed an interest-bearing retirement account?

where do you plan on living, while living on $1600/mo?

Because most likely... I am of the "poor dad" variety.

 

[Dgeorg6]

1600 a month after taxes is not middle class. That's living in poverty. You think you can afford rent, insurance, gas, food, cell phone, etc... On that much a month?


But on another note... I feel bad for people coming out with that much debt. If everything goes as planned il be going to my state school and my parents pay for living cost and il end up with about 120k in debt when I'm done with dental school. If I had to go to a different school and had 300k+ in student debt I would go the military route in a heart beat.

 

[yappy]

Yeah, I would be fine.

1600 a month after taxes is not middle class. That's living in poverty. You think you can afford rent, insurance, gas, food, cell phone, etc... On that much a month?


But on another note... I feel bad for people coming out with that much debt. If everything goes as planned il be going to my state school and my parents pay for living cost and il end up with about 120k in debt when I'm done with dental school. If I had to go to a different school and had 300k+ in student debt I would go the military route in a heart beat.

 

[Bobby Fischer]

1600 a month after taxes is not middle class. That's living in poverty. You think you can afford rent, insurance, gas, food, cell phone, etc... On that much a month?


But on another note... I feel bad for people coming out with that much debt. If everything goes as planned il be going to my state school and my parents pay for living cost and il end up with about 120k in debt when I'm done with dental school. If I had to go to a different school and had 300k+ in student debt I would go the military route in a heart beat.

Yeah, I would be fine.

this exchange is funny on both sides IMO. (even funnier before the reference to mom's dress removed)

Funny enough, the living expenses provided for the rest of us peasants are 21,500 per year with the student loan route (little less than 1800/month). This is an expensive state, though.

Yeah, its poverty. But in the long run by the time I am done at 39 years old, the idea of making a decent salary (finally!) in a respectable profession is great motivation. I've been living in poverty pretty much the last 15 years after marriage, kids, and having chosen a horrible, horrible profession the first time.

 

[Bereno]

Where I live 1600 post tax is very doable/middle class. My logic in not giving to a retirement account is that 6.8% interest would wipe out any 1-3% gain.

Bereno, point taken. It is aggressive; but, I feel like the 4 year time frame is a good goal. The loan payment numbers were calculated by the same on line calculator Bobby referenced.

Well, I still don't get the same numbers - it doesn't really matter at this point lol.

What makes it a good goal? (I'm genuinely curious) I would write down the pros and cons of paying off that fast. For me there would be some pretty large cons. Namely a lack of emergency fund, a lack of developing working capital, a substantial delay in the ability to buy a practice, a delay in potential income growth (from the delaying the purchase of a practice), and a delay in the ability to buy a house. The only good thing about paying it off that early is that you pay less on the loan, which might seem great but I don't see it as all that valuable. Especially when pitted up against the cost of doing so lol. Why not hit these loans harder a few years in your career when you have a bit more to income hit them with? Now that I have gone off on a mini tangent, these are MY cons, not yours. If you value paying off your loan that much, then you will certainly weight it higher than me lol.

 

[JAWSSS]

All of these posts assume that all of us getting out of dental school are going to be ALONE!

For those of us that will have assistance from a spouse/partner (with a job)... aggressive loan repayments are not bad at all.

Yes, if you plan on going to USC (as an example), getting out and trying to live alone in North Hollywood and starting your own practice with no spouse or other income... You will probably find repayment difficult. however, if you are smart about choosing a school, finding a cost efficient place to start your business (if that is what you choose to do) and you have another source of income (even a small income), you should be MORE THAN FINE.

 

[Bereno]

All of these posts assume that all of us getting out of dental school are going to be ALONE! (not really... my posts are aimed at balancing your cash flows of which a spouse's income would add to. If you have the cash flows to pay off your loan more aggressively, then by all means, do!)

For those of us that will have assistance from a spouse/partner (with a job)... aggressive loan repayments are not bad at all.

Yes, if you plan on going to USC (as an example), getting out and trying to live alone in North Hollywood and starting your own practice with no spouse or other income... You will probably find repayment difficult. however, if you are smart about choosing a school (this can be difficult for those many applicants that are only accepted to expensive schools), finding a cost efficient place to start your business (this is also fairly difficult to do as well as being somewhat reliant upon luck)(if that is what you choose to do) and you have another source of income (there will be quite a few single dental grads that will not have this to rely) (even a small income), you should be MORE THAN FINE.

My responses are in red. I hear what you are saying, of which is all true. However, all of these scenarios are not likely to befall the majority of newly graduated dentists, and thus still presents itself as a concern to those who are not as financially savvy. Good input though

 

[Blake1e]

why would you want to do this? what are you doing to feed an interest-bearing retirement account?

where do you plan on living, while living on $1600/mo?

Considering the gov will eventually just raid the retirement funds (like they did in Spain and Argentina) putting money for retirement is a bad idea, at least for now. Just like hyperinflation occurred after the collapse of the Soviet Union the same will happen here in socialist America and that will render your savings into a small fraction of its original worth.

I happen to think yappy's plan is good, though I think about 6 or 7 yrs is more realistic than 4 yrs.. For living arrangements one could perhaps live with their parents or some other family member. According to this 48% of people have low income and are below the poverty line. These people arent dying off so it is entirely possible to live off of little amounts of money.

One would need to be truly devoted to living a life of austerity for a few years and this clearly will involve a lot of self-discipline.

 

[NDPitch]

All of these posts assume that all of us getting out of dental school are going to be ALONE!

For those of us that will have assistance from a spouse/partner (with a job)... aggressive loan repayments are not bad at all.

Yes. I won't be alone, and plan on being super aggressive with my loans. I've also been working for a few years and already have an emergency fund established.

Bereno, your thoughts? Should I empty my emergency fund towards tuition, or should I bank it so its there when I graduate, allowing me to be more aggressive with my loans at graduation (two incomes)?

 

[jmh018]

All of these posts assume that all of us getting out of dental school are going to be ALONE!

For those of us that will have assistance from a spouse/partner (with a job)... aggressive loan repayments are not bad at all.

Yes, if you plan on going to USC (as an example), getting out and trying to live alone in North Hollywood and starting your own practice with no spouse or other income... You will probably find repayment difficult. however, if you are smart about choosing a school, finding a cost efficient place to start your business (if that is what you choose to do) and you have another source of income (even a small income), you should be MORE THAN FINE.

Not if your wife is a stay at home mom! I guess I will have to save more and maybe work some long hours but I don't mind. Everyone will be fine. We will all be able to afford it.

 

[Bereno]

Yes. I won't be alone, and plan on being super aggressive with my loans. I've also been working for a few years and already have an emergency fund established.

Bereno, your thoughts? Should I empty my emergency fund towards tuition, or should I bank it so its there when I graduate, allowing me to be more aggressive with my loans at graduation (two incomes)?

I would keep that emergency fund right where its at... after all, its an emergency fund lol. I would only dip into that fund for 2 reasons. 1, an emergency comes up... duh lol and 2, if you can use some of it to put a down pmt down on your practice. This would allow you to buy a practice much sooner than later, which would allow you to increase your income much sooner than later. Thats just my $0.02

 

[dantemac]

I think one secret is to date someone with a good income. It was actually in one dental schools financial aid handbook lol: "Working with two incomes is better than one"

 

[EpicDentist]

Welcome to dental school.

And as for the rates being 6.8, that's only for the federal direct loans, which only allow 47k per year. You'll be taking the rest as a Grad PLUS loan at a whopping 7.9%, and a disbursement fee of 5% for each loan.

But as I said in the other thread on the dental board, the interest rates are not the problem. It's that the government has a strangle hold on the student loan industry. See my rant in the thread below.

http://forums.studentdoctor.net/showthread.php?t=977738

I know most people take loans from the government, but isn't there a limit that forces us to take loans from other programs like GRAD Plus? If that's correct, what's the maximum amount you can borrow from the government?

I'm trying to figure out how much I will be borrowing from Grad Plus and the government. I am expecting to need 200,000 for all four years at New Jersey Dental School.

 

[azimmer]

Looks like I'll be living with my mom after dental school to pay back all my loads.... crap. I don't wanna live with my mom till I'm 40!

 

[AlbinoPolarBear]

I know most people take loans from the government, but isn't there a limit that forces us to take loans from other programs like GRAD Plus? If that's correct, what's the maximum amount you can borrow from the government?

I'm trying to figure out how much I will be borrowing from Grad Plus and the government. I am expecting to need 200,000 for all four years at New Jersey Dental School.

The limit to the grad plus is up to the cost of attendance that the school calculates.
Don't worry, they give enough to live on.

http://www.umdnj.edu/studentfinancialaid/app_process/stu_budgets.htm

They will let you borrow up to 62k/year if you are living with parents or 72k/year if you are an independent.

So you will be offered:
~47k in direct stafford loans (at 6.8%)
~15k or ~25k in grad plus loans (7.9%)

You don't have to take all of it if you don't need it.