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USC First YR Cost of Attendance $140k 2018-2019

Discussion in 'Dental' started by Cold Front, Apr 5, 2018.

  1. Cold Front

    Cold Front Supreme Member
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    I have been tracking the crazy cost of attendance increases at this program for the past 7 years, and it has gone up 23% during that period for just the first year (not including years 3-4), which is about $26k increase from 2012-2018.

    Historically, they have been rising 2-8% a year. At the 2% pace, the next 7 years first year cost of attendance will be; $150k 2 years from now, $160k in 5 years, $170k in 7 years,

    2012: $114k (4% increase)
    2013: $123k (8%)
    2014: $127k (3%)
    2015: $130k (2%)
    2016: $134k (3%)
    2017: $137k (2%)
    2018: $140k (2%)
    2019: ?

    Compound interest not included.

    People are still applying.
     
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  3. GypsyHummus

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    It will continue to go up, why shouldn’t it? They have more than enough applicants to fill the spots, lots of people want to be a dentist.
     
  4. free99

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    I'm not sure what it'll take for predents to stop applying to schools that cost that much, but I agree that the costs will continue to rise until either 1) the gov't puts a cap on how much they will loan students for professional school or 2) students stop applying because they realize the initial cost isn't worth it to become a dentist. Many people don't realize that paying that much for school was a bad idea until they're faced with the reality of paying the loan back when they graduate.

    I want to see professional school continue to be attainable for students who don't have the means to fund any of it themselves without loans, but it's getting out of hand that schools seem to be able to raise costs so frequently. Do the schools have to provide some sort of justification of their tuition increases to the federal government?

    Because at some point, motivation to service enormous debt may eventually surpass motivation to do what's right for a patient.
     
  5. GypsyHummus

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    I think philosophically it’s an interesting question to ask. I mean, if people are willing to pay 600k+ for a dental edication, should they be able to?

    Is it the schools fault that the student took out the money? Nobody is forcing the student to go to dental school.


     
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  6. Cold Front

    Cold Front Supreme Member
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    The interesting thing is, the students applying to this school from next month will be so focused on getting in, and not so much on the $143k with interest price tag they will walk themselves into this time next year, for just 1 academic year.

    The government is sleeping behind the wheels on this, and the demand is mostly by 20-24 yr olds who are financially illiterate when it comes to Return in Investment in Education at these expensive programs.

    USC will continue to push to raise the cost, because the line is so long, that they will raise enough each year to not snap the demand curve. That’s a great business model in education in the long term.
     
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  7. Mr. Thirsty

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    It isn't going to decrease any time soon. I think that you are right, the next step is the government limiting the amount of Grad Plus loans that they hand out (this will most likely be on the radar once the government sees how much they are paying back to those who take advantage of the IBR plan). Depending on how this affects the amount of applicants will determine whether schools lower tuition or not.
     
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  8. Kou_KeiKi

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    Just curious, where did you find the first year cost of attendance for 2018-2019 year?
     
  9. Cold Front

    Cold Front Supreme Member
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    Research shows that student loan repayment success corresponds directly to income. Average dentist income has not increased at the same rate as student loans over the past few decades. Now we are seeing the effects of this:

    1. More new doctors working for corporate dentistry.

    2. Younger doctors not buying or delay buying their first home, and putting any major life financial decision on hold until they can.

    3. There was a time military scholarship was frowned upon, specially army, by most Dental students, now it’s competitive to get one, specially Air Force.

    4. IBR is slowly becoming the primary repayment method for new grads.

    5. More new grads live with their parents more than ever before. It’s a norm for many until they get on their feet.

    6. More refinancing companies entering the student loans market. There are even ads those companies pay on this website.

    7. An ecosystem of student loan default options.

    8. There use to be plethora of clinical graduation requirements and tough clinical boards. Now it’s all about the mannequin exams and schools don’t want to rock the boat for those students who paid a ton of money to get their diplomas.

    9. Dental Corporations now do more lunch and learns at schools and scout for their next batch of new dentists.

    10. The government tricking loan forgivenesses for students to get into a field, when everyone knows any new president can reverse it under new government budget plan.
     
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  10. Cold Front

    Cold Front Supreme Member
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    I mentor pre-dental students. USC didn’t publish the new cost of attendance on their website yet. But a phone call to their financial aid office confirmed.
     
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  11. O Gaúcho

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    Makes me wondering if the HPSP will ever start making a list of school they won't pay for.
     
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  12. Cold Front

    Cold Front Supreme Member
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    The compounding effect for the USC first COA at 5% means that... the first $140k loan will balloon to $170k by graduation.

    $500-600k debt is the norm for private schools these days. Considering 30% of grads specialize, add $200-300k with interest to the tab. Those are today’s numbers

    The new grad income to debt ratio in 2017 is about 20-30% debt service for $130k annual gross income the first few few years out of school. I don’t think most people realize, if you are going to pay 20-30% of your paycheck to your student loans, and 25-30% for your federal, state and local taxes, you will be down to 40% to live your life, or about $4k a month for rent, car, health insurance, utilities, food, etc.

    The schools are exploiting the profession at the education level, without fully understanding the consequences of high tuition in the real world.
     
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  13. 2TH MVR

    2TH MVR Orthodontist
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    I applied to DS in 1984. Even back then ..... USC was EXPENSIVE. USC was my back up option. Thank goodness I was accepted to a cheaper DS.
     
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  14. studentdent00

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    1. USC is in CA. Everything in CA is expensive.
    2. 2% is about the rate of inflation, so it's not an outrageous increase.
    3. What's your annual fee schedule increase like? Would suspect it's more than 2%
    4. A lot of people in DS have rich parents (dentists, physicians, lawyers, or executives of small-mid companies) so they get a lot of family help.
    5. we all know 150k associate income is temporary and that ownership is inevitable for most newly graduating dentists. ownership=sky is the ceiling.
    6. cash flow is king. stretching out the payment to 25y would minimize the monthly repayment.

    Cliff: ballooning tuition is certainly becoming an issue (not just in dentistry but in higher education in general), but looking from the bigger perspective, it is containable at least if you strategize and know what you want. The ROI for dentistry is still there despite such an increase in tuition.
     
    #13 studentdent00, Apr 6, 2018
    Last edited: Apr 6, 2018
  15. Big Time Hoosier

    Big Time Hoosier Man. Myth. Legend.
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    Good luck getting a practice loan with $600,000+ in student loans.

    Big Hoss
     
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  17. oralcare123

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    Anyone is interested about housing market pricing in LA/San Diego ? It's much much scarier
    Obviously financing USC education just by loans is not wise at all, but majority of students in USC are not doing so and they wouldn't be taking loans for their practices either
    Trying to warn lets call them unwise - very noble, but futile
     
  18. Cold Front

    Cold Front Supreme Member
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    1. High Tuition is not exclusive to California. In fact, highest tuition is not USC, but by Midwestern programs. NYU, BU, Tufts, UPenn and the likes are up there too.
    2. No correlation at all. Core inflation has been negative 2008-2010, and was below 2% since then. Cost of education has been rising at 2% at their worst year and above 10% in their best.
    3. You can’t use my/any office fees as a benchmark to justify education cost. Even if my fees go up 2% a year, how is that remotely related to the national student loan crisis?
    4. This is one of the biggest myths. Yes, there are rich parents, but even with USC who has 100+ class size, the vast majority of students are getting blank checks from the government to pay for the school. This has been the case for many years, and will be for many more to come.
    5. $150k associate income is equivalent to $600 a day with 2 weeks of vacation. Yes, there are doctors who are making much more, but they work in rural towns or small cities with little competition. There is a reason why 90% of all associate dentist jobs don’t guarantee more than $600 a day, because that’s the industry limit for an employer to take a risk at an associate for just having a pulse. Anything more, associate needs to break a sweat.
    6. Stretching out debt repayment to 25 years will mean that you will be paying interest only and the principal amount of the loan will not change much for the first 10 years. By the time the debt is paid, the total payments made could be more than 2x of the original loan.
     
  19. Big Time Hoosier

    Big Time Hoosier Man. Myth. Legend.
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    Definitely a messy proposition.

    D9DF3824-EB0B-4A93-834F-AA6CC1741804.gif

    Big Hoss
     
    #17 Big Time Hoosier, Apr 6, 2018
    Last edited: Apr 6, 2018
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  20. jeffk805dent

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    USC undergrad (full ride) and UNLV dental grad here. Didn't apply to USC dental because of the outrageous tuition and their PBL program and this was less than a decade ago. UNLV after one year gives OOS students in-state tuition (assuming they followed the proper steps). What shocks me is that both USC undergrad and dental school the number of applications keeps rising while the tuition continues to skyrocket as well (lol I aint paying 280k for a biology degree).

    If I am not mistaken the USC pharmacy school saw a decrease in applications in recent years. But I wonder if those applicants know there is a ceiling in pharmacy whereas there is a very grey area when it comes to a ceiling in a dentist's salary.

    I paid my dental school loans in less than 6 years and it felt like I lost a part of my soul (nothing unethical just a lot of money burned to Uncle Sam). I dont even want to think whats going on in a USC dental grad's mind (assuming they even think about it).
     
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  21. PTSD

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    What's going thru their minds is IRB, REPAYE, ect. The govt never made a promise these programs would exist in the future and borrowers cannot claim they relied upon a promise or a reasonable expectation that these programs would continue. Congress can legally change/cut funding at any time without grandfathering anyone. Any time being when populist politicians realize rich doctors are deliberately abusing a program meant to help teachers/social workers and dumping billions of dollars of debt on taxpayers. Even if they could grandfather people why would they, the American public will not be outraged for the rich dentists who tried and failed to dump their loans on the public. Even Obama wanted to cap these programs due to the incredible expense. Bernie Sanders' head would explode if he discovered the truth.
     
  22. schmoob

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    Even with IBR, PAYE, REPAYE, etc, the total amount paid plus the tax implications for the discharged amount is not too far off from the original amount borrowed. And for those who are able to pay off their loans, the govt makes pretty good money from the interest earned on such a high amount.
    The government is losing money on students who go to expensive undergraduate and graduate schools for degrees in 16th century German literature. They have high loans but work as baristas because they can't find jobs. It's not the doctors the government needs to worry about, they will get their pound of flesh from them.
     
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  23. Svart Aske

    Svart Aske is stabbing his eyes out

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    Half a million in student loans? Don't worry just move to rural Idaho and open a practice, you'll pay off your loans in no time
    /s
     
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  24. Cold Front

    Cold Front Supreme Member
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    There was a story I came across in the paper the other day, that 1 in 5 students spent some of their student loans on crypto currency, and most of them are planing on going on IBR after they graduate.
     
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  25. RealTalkTalkTalk

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    Yes there are actually some people that are sort of "forced" to go to dental school. Lot of pressures out there. Even if someone is not forced to, they may not know what they are getting into.
     
  26. GypsyHummus

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    Nobody is forced to do anything they don’t want to.


     
  27. RealTalkTalkTalk

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  28. theleatherwalle

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    Once you go past 250-300k of loans being a dentist just isn't worth it anymore. I know people talk about the passion for dentistry, but at the end of the day its a job. Drowning in 500k of debt and hoping to make it big in socal is death a sentence. Unless, they guaranteed an OMFS spot that price for tuition is outrageous.
     
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  29. jeffk805dent

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    Prospective dentists could always work outside of SoCal and fly in for the weekends. Dentistry is one of the few jobs to get you a good wage while working 3-4 days a week.
     
    #27 jeffk805dent, Apr 11, 2018
    Last edited: Apr 11, 2018
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  30. TheSuccessfulDentist

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    Once you hit 500k or more in student loans it really begins to affect the trajectory of your career as a dentist. Will it be worth it? Only each individual can answer that. Some dentists are very interested in the business side of things and want to be an entrepreneur. I think those people can ultimately overcome this huge debt if they are successful. On the other hand, it leaves less room for error if you are starting up your own business and you have a lot of debt. If you become an OMFS earning 500k-1M per year then you will be fine. If you plan to work as an employed dentist earning 120k-200k for the foreseeable future then you have to REALLY love dentistry because it will have likely been a financial mistake. As many have said before, one of your top priorities as a pre-dent is to try to get into a school that will allow you to graduate with the least amount of student debt possible.

    I really enjoy investing and personal finance, but you can't really start to have fun with investing until you have some disposable income to work with. And time is one of the most powerful forces in growing your personal wealth. You are already behind the curve as a dentist when you graduate because you have been in school for 4 or more years than friends who you went to college with who chose other career paths. If you have a huge debt burden on top of that then it will be even longer before you have a significant amount of money to invest. At that point there may not be a whole lot of time to worth with in terms of investing and allowing compound interest to work for you. Dentistry is awesome, but a huge debt burden can really put a damper on things. Not fun.
     
  31. Cold Front

    Cold Front Supreme Member
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    Well said.

    It would be interesting to survey (i’m sure the ADA won’t as an advocate of the profession) graduates who carry $500k+ total student loans (dental, undergrad and so on) and see how it impacts their finances over 5-10 years... for public interest. The public (tax payers) should not be placed in a position to learn about the cost of education crisis when the roof collapses. It is unfortunate that a lot of publications like US News and World and the likes are marketing to parents and their children for schools with high tuition every year, without also giving a realistic post-education outlook of career paths, specially in Dentistry.
     
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  32. TheSuccessfulDentist

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    I do some consulting on practice transitions and I’m working on one now where the graduating specialist has almost 700k of debt. We will be able to make it work for both parties and the new dentist will not need to get financing from a bank.

    Still, it will be a few (or more likely several) years before this new Dr is on solid financial footing and ready to think about things like investing for retirement. He will have to live a spartan lifestyle and attack this debt with everything he can until it’s gone. If this new Dr were looking at a job making 120k-200k as an employee for the long term I don’t know how he would make it. As it is, he is going to a favorable market and buying a solid practice with healthy cash flow. The purchase will be internally financed over several years.

    This is an example of the extreme in terms of what is doable. This level of debt would keep most people up at night. Yikes.
     
  33. Cold Front

    Cold Front Supreme Member
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    $700k was unheard of as recent as 2000-2010. Good for your client to be finding a way to manage this big debt. I’m assuming the internal financing for the practice acquisition is still a debt, and pushing the buying doctor’s total personal and businesses liabilities to over $1M+. If so, more post-dental school debt was necessary, even though it’s manageable. Again, there other additional personal debt still ahead; new home, new car, credit cards, etc that could eventually would increase the doctor’s total debt. It seems that new grads have no other choice but to accept this new reality, and make high debt the key to survive as a dentist.
     
  34. jeffk805dent

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  35. TheSuccessfulDentist

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    Internal financing can be great when you have so much debt it’s likely no regular bank would loan you more money. Yes, it’s still a debt and as you say, there are potentially more costly items on the horizon. On paper this will push him well beyond the 7 figure mark in personal debt.

    In this case the Dr is willing to move thousands of miles from his home state to find a favorable market. He will have to live an extremely frugal lifestyle for a number of years, and he will have to work very hard to be productive. As his income rises his tax bill will go way up. Even with a nice income this 700k debt will be a tall mountain to climb with little room for error. In this particular case it’s doable, but not easy.
     
  36. 2TH MVR

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    I'm a little surprised that the selling dentist was willing to take this risk. If the practice is so good .... seems like there would have been other buyers with better financials (i.e bank loan).
     
  37. ysrebob

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    I have felt for years that the real hit-the-fan point for private schools and their students/grads will come when interest rates increase in a meaningful way. For the first time since 2008 crisis, this appears to be on the horizon.

    $500k at say 8 or 10% interest (a rate which sounds high right now but would not be abnormal from a historical standpoint) is a steeper hill for the new grad to climb than at the abnormally low interest rates that have obtained in recent memory.

    If I was a new grad, would def be trying to lock down fixed rates.
     
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  38. TheSuccessfulDentist

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    Possibly true. There might be other buyers, but this isn’t a sought-after area for dentists in general. It’s a bit complicated to get into here, but the way it’s set up there is a limit to the seller’s liability. The new Dr will be earning his way in primarily via “sweat” equity. This approach works really well for all parties, but it certainly works better and it’s more comfortable (especially for the buyer) when the new Dr brings less debt to the endeavor. This also only works in a phased transition. The seller isn’t walking away completely for several years.
     
  39. frozenicecreamDMD

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    your suggestion is very valuable. but fixed rate means non-federal loans that often require some assets. this means either the students' parents have to cosign the loan from private bank for the fixed interest rate to be lower than federal student loan's interest rate. Or else, its equal or higher

    I am saying this because I have been trying to look into private bank's student loan and its interest is at best equal to federal student loan without all the perks of federal student loan (IRB, PAYE, etc). However, private bank's student loan does not charge origination fee thou (1% - 2%).

    To be honest, what other students fail to look at is the interest rate and the origination fee on top of this massive loan.

    lets say 100k loan per year, this means you pay 2k$ to take it out, then 6k interest per year.
    I found interest in the amount of 30-40k for 300k loan to be untrue but now in school, this is the reality!
     
  40. Cold Front

    Cold Front Supreme Member
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    The seller must be very eager to sell or taking advantage of a desperate and inexperienced new grad. Not to mention the learning curve a new grad (even a specialist) has to go through from school/residency to the real world.

    I am sure, like you said, this will all work itself out in the end for the new grad. But, let’s not forget, if a bank/s wouldn’t even approve this, what does that say about risk level from the buyer’s perspective, a seller can always take their practice back if the buyer defaults on the seller/internal financing. I don’t know all the details, but this deal seems like very ambitious to me. Like you said, little room for error, and in no way would be easy for a buyer who moved from the other side of the country to make such a big financial decision, without at least seeing themselves in the practice and the new environment or city first.

    Question for you... What you have done this deal if you were in the buyer’s exact shoes?
     
  41. TheSuccessfulDentist

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    First, I would say every seller is eager to sell otherwise they would not go to the trouble of selling. Second, I would never be a part of a transaction in which one party was taking advantage of another. Thirdly, you bet I would do this in a heartbeat if I were in the buyers shoes. I can’t imagine a better situation financially for this buyer—as long as the buyer settles in and likes living in this location long term.

    In this case there is a good match because the seller is in a market that’s tougher (not impossible) to find buyers and the buyer is willing to move and live there because he can see himself being happy there and because it allows himself the oppprtunity to turn his situation around financially. So there are complementary needs, but desperate is not a word I would use. Nor is there any exploitation going on.

    The seller has a profitable, well-run practice which offers the buyer the opportunity to come in and work hard and be as productive as he desires. The buyer will work hard, but he will be well-compensated for it. Isn’t that what anyone in this situation wants—just the chance to put their skills and education to work and to change their financial situation by working? It’s not like the work we are talking about is exactly back-breaking labor. He will be busy. He wants to be busy. He will reap financial rewards from this work. Is there a problem with any of this?

    I’m confident if you could see the details of the situation you would see it’s a win-win type of deal. I won’t reveal and confidential info. If the new Dr decides he hates living there then that could be the way it unravels. However, I’ve worked on transitions very similar to this before and things have turned out beautifully. Of course sooner or later one of these will implode or something unexpected will happen, but I haven’t run into that yet.

    Lastly, the location of this practice is in a very pleasant, livable place. It’s just not on the coast or near a large, popular city. The opportunity is there for anyone to do extremely well financially if they are willing to change the location of their home base. “Geographic arbitrage” is the fancy name for it, and for anyone who has a crushing student debt it’s worth exploring.
     
  42. Cold Front

    Cold Front Supreme Member
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    It’s almost “always the case” for a new doctor moving from their hometown or a big city where they have a strong social life (which is big deal to young doctors) to a far and smaller city and start a new life from scratch, and be there beyond 5 years. I know a similar situation happened with a good friend of mine. She was from Miami, FL and moved to a small town in the middle of Illinois, and ran her own practice for 5 years. She was doing real well, paid off her student loans and all her debt, but by year 3, she listed the practice for sale, and it didn’t sell for another 2-3 years. She dreaded the wait to sell the practice and almost walked away.

    The point here is a younger new grad buyer’s life could change anytime. They could get married and move to another city, they could be bored out of their mind after assuming that everything would be fine in the beginning, they coud be homesick, and so on. I’m not saying your buyer will go through these life changing experiences, but it’s psychologically uphill battle to change lifestyle and build a new life for a long time for a young person. It would be interesting to know what your client’s situation would be in just 3 years, let alone 5 years or more.

    Many people know they can make a lot of money if they move to any fly over or big sky state, but they just won’t give up everything else for it. That’s why access shortage continues to exist in many states.
     
  43. TheSuccessfulDentist

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    It’s not for everyone. But I have seen it work out really well on many occasions. It works best in cases where the buyer has a spouse or at least significant other who is on board. There are a lot of factors involved.

    Bottom line (and the point of this thread) is that yes, there are ways to deal with extreme levels of debt, but it’s better to keep debt low and thereby keep options open.
     

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