Depends on the loan. If you have high interest now, pay them off, but chances are the rates are low (from the recent recession we had). In that case, wait till rates rise significantly and pay them off then. You can take that money, put it in a money market and earn higher interest.
Those earnings will come in handy down the road.
As for whether or not the gov't pays the interest, that depends on the type of loan you took out. If you took out Subsidized loans, then you're golden and the gov will pay for the interest. Otherwise, see my above recommendation.
Since you're doing dentistry, the amount you take out will be anywhere up to $300. That said, you'll be fine after you graduate. I've calculated the worst case scenario and take a $300 grand debt @ 7% interest (unsubsidized, mind you).
If you can average $125,000 salary over the span of 20 years (average guys...average), you'll have after:
- Tax (30-40% bracket)
- Loan Payment (20 year plan)
-$40,000 (give or take a few thousand)
This is the same as if you worked a $60,000/year job. However, you have the career you always wished for, working 4 days a week 7am-7pm (or whatever hours you wish).
This works out well, and don't stress so much about the loan...regardless of what financial aid advisor tells you.
I highly suggest you take advantage of the recession rates on the loans, save the money in money market (or use it for your own purposes like expenses during school) and pay the loans off as fast as you can when you get out. Oh yeah, I forgot to mention that most loans in ugrad and dental school do not capitalize until you graduate or begin paying back the loans. If the latter is the case, then I highly suggest you wait to pay off the loan till you graduate (assuming you can defer them while in dental school).
