When is the cost of Dental School too high?

[baseballjunkie]

So I got into USC and only USC and I'm going to go, but any more thoughts on this?

I'd suggest working your first 10 years in public health dentistry, while extending your loan to 25 years.

1) If you work a NHSC shortage area, you can get 50k for each 2 years of work toward loan repayment.
2) Extending your loan to 25 years will reduce your payment, and cap it at 15% of your total income. (Google "income contingent repayment")
3) If you work for the government in public service, after 10 years all of your remaining student loan debt is forgiven. So even if you've only paid 150k of that 400k, the rest is still forgiven....

All of these ideas were given to me when I interviewed at USC. You have to get creative to pay that high of tuition...

---

Members don't see this ad.

 

[Blue Panther]

3) If you work for the government in public service, after 10 years all of your remaining student loan debt is forgiven. So even if you've only paid 150k of that 400k, the rest is still forgiven....

I am not 100% sure but I think that $275k will be considered taxable income during that 11th year.

 

[fenderstang]

I'd say if you want affordability stick to your in-state, state schools. Many of these dental schools gouge the out of staters with price, same with private schools, because people are so concerned about just getting in they will tolerate it, but if I did it over again, I think I would have just applied to my in state schools, and saved the money and travel on all these other schools. Even if you don't get in the first year, really 1 year is not a big deal at all in the long term, and it might even be worth saving a ton of money by going with a school with a lower tuition

 

[iwannabadentist]

I am not 100% sure but I think that $275k will be considered taxable income during that 11th year.

even if it is, you'd only be paying a third of that amount (in tax), not the entire thing. save up your money accordingly in the 10 years so you have enough money at the end of the 10th year to pay the tax.

 

[Daurang]

WSJ article about college cost in general...

http://online.wsj.com/article/SB100...75238692439240552.html?mod=WSJ_article_MoreIn

 

[nextuszerodmd]

I am not 100% sure but I think that $275k will be considered taxable income during that 11th year.

you're slightly right, but i think here is the big kicker that a lot of people don't get when they think about loans. in the beginning you're mostly paying off only interest (so your first few loan payments are nearly 99.9% all interest). not until when you get halfway into your schedule than it will start becoming MOSTLY principal.

Let's throw a scenario down which is a bit ugly
-You owe $400k on loans at 7.5% interest
-Your make $120k/yr teaching and plan to teach for 10 years so you can do the IBR forgiveness program
-You pay roughly $1500 a month which equals $18,000 a year towards loan

$18,000 is only 4.5% of $400,000 so 3% gets added back into your loan amount which is $12,000 (that's if its compounded yearly). now the next year you're going to owe $418,000 and if you pay $18,000 thats even a smaller percentage of the loan amount (4.3%), so therefore 3.2% of $418,000 gets added back into your loan. by the time 10 years is up you're going to owe $581, 542.41 (true negative amortization on a monthly basis). so good luck paying tax on nearly $600k on the 11th year. also you just blew away $18,000 X 10 = $180k on nothing.

this is similar to the subprime/alt-a option arm negative amortization loan that cause the housing bubble and eventual meltdown.

p.s. this is if the gov't doesnt pay off the neg interest every month for you

 

[nextuszerodmd]

[FONT=arial, helvetica]"Unpaid Interest .
[FONT=arial, helvetica]In addition to discharging the remaining balance at the end of 25 years (10 years for public service), the IBR program also includes a limited subsidized interest benefit. If your payments don't cover the interest that accrues, the government pays or waives the unpaid interest (the difference between your monthly payment and the interest that accrued) on subsidized Stafford loans for the first three years of income-based repayment. Interest on unsubsidized loans and interest that accrues on subsidized Stafford loans after the first three years will be capitalized upon status changes (e.g., a borrower is no longer eligible for IBR or chooses to switch to a different repayment plan). Borrowers who are concerned about the potential for negative amortization, where the amount owed grows because the payments are less than the interest that accrues, always have the option of increasing the payment to at least the interest since federal education loans do not have prepayment penalties.".


[FONT=arial, helvetica]So the government is only paying the interest difference on stafford subsidized loans for the first 3 years....after that all your loans are going to balloon!!!!!.


[FONT=arial, helvetica]
.

 

[nextuszerodmd]

So (with the gov't paying 3 years of interest difference for you)

$400k loan 25 year plan and let's say you pay $1500 a month and ideally your whole $400k is subsidized. At the end of 25 years you're going to owe a whopping $1,075,530.11 and wasted $396,000 doing nothing

OR


$400k loan 10 year plan and let's say you pay $1500 a month and ideally your whole $400k is subsidized. At the end of 10 years you're going to owe a whopping $513, 219.57 and wasted $126,000.

Try paying taxes on $1 million and $500k....(I wonder what tax bracket you would be in?...LOL)

 

[Quattro DMD]

Is there any surrounding state that takes Arizona residents as IS? We have two WAY expensive private schools here, but no public dental school.

You best bet is to the surrounding state schools via WICHE, but you can also go to ASDOH or MW on WICHE as well.

 

[xhamburgersamx]

I believe the public service loan forgiveness of 10 years program is non-taxable so look into that.

At the 25 year mark, if you still owe say $300k, it wont be bad but you just probably used up a bulk of your savings.

 

[GiTsticker]

[FONT=arial, helvetica]Taxability: Public service loan forgiveness is not taxable under section 108(f) of the Internal Revenue Code. See Taxability of Student Loan Forgiveness for additional details.

. [FONT=arial, helvetica]Caveats .
[FONT=arial, helvetica]The public service loan forgiveness program is targeted at students who pursue public service careers and who have high debt and low income. Borrowers with low debt or high income will not benefit as much. .
[FONT=arial, helvetica]As a back-end loan forgiveness program, the public service loan forgiveness is an all-or-nothing benefit. If a borrower stops working full-time in a public service job, even with just a few of the 120 payments left, they get no forgiveness. .
[FONT=arial, helvetica]The public service loan forgiveness option's main impact is to remove debt as a disincentive to pursuing a career in public service. Most borrowers will still earn less in a public service job than in the private sector, despite the forgiveness. But previously borrowers were precluded from long-term employment in public service jobs because the debt-to-income ratios were unaffordable. .

 

[Demeter]

Most of us went into dental school so that we could have a job in health care and be our own boss. The dream of being a practice owner will have to be put on hold of many years for the guys graduating with 450,000$. Banks are hesitant to loan money to new graduates. If you already owe 450,000$ you are probably too high a risk for the banks to lend you another $400,000.

Corporate Dentistry is loving this, because they will always have new docs to fill their clinics even at low offers such as 20% production. But people have student loans to pay so they will take the job. What really sucks is some of you guys will end up working for chains like KoolSmiles. Then you will have some pencil pusher with a business degree tell you that your production is too low and that you should papoose kids so you can produce more money for them.

I guess the good news for a practice owner is that I should have an easy time getting an associate.

 

[Demeter]

My friend graduated NYU a few years ago. She told me that she is only able to pay back the interest on her loan. And she has been practicing dentistry for 5 yrs now.

 

[avatarftw]

a

 

[avatarftw]

a

 

[cmcner]

22,000 a year for a single person seems very high to me. I'm spending ~7,000 next year.

(no car, the school is close enough to use the bus/bike to and there is a grocery store a mile away)

You're actually going to spend 1,000 on books?!

Maybe you could save a little, but it's not as high as you would think. Lets say that you get a studio in LA that's $1000 a month then if you want cable and internet lets call that $100 a month, then $30 a month for groceries, and lets say you have an old used car thats paid off that you only drive when you need to go someplace away from campus thats $50 a month in insurance plus $20 a month in gas. And lets say you have a cell phone we'll call that $40 a month. We'll call utilities $40 a month and you spend $100 a month going out.

So thats 1000+100+30+50+20+40+40+100=$1380 a month = $16560 a year.
So yes you can spend about $5500 less a year if you live quite modestly, but I did estimate on the low end and things and $100 a month for nonessentials is unlikely to be realistic and cover everything not included in that budget so yes you can cut there, but not substantially.

 

[avatarftw]

a

 

[cmcner]

You don't have to spend 100 dollar each month to go out.

You're a better person than I, like Mother Teressa style , or else you haven't seen LA prices. That's only $3.33 on yourself a day. And yes you could cut cable if you wanted, just the average person doesn't so I put it in there, also I mistakenly put my weekly estimate of groceries in there so your total of $150 is more correct so subtract $1440 bringing the savings down to $4,060 a year losing cable would raise it back up to $4,660 annual savings before any unexpected expenses (medical co-pays etc).

 

[robg]

$150 for groceries is unrealistic, unless you eat Raman noodles 24/7

 

[Slack3r]

$150 for groceries is unrealistic, unless you eat Raman noodles 24/7

I said this a while back and got torn a new one. $5/day hardly seems sufficient.

 

[nextuszerodmd]

I said this a while back and got torn a new one. $5/day hardly seems sufficient.

I spend roughly $40-60 a week on groceries. $40 if its just basic food. $60 if i need other stuff (hygiene, cleaning products, everyday stuff, etc).

 

[avatarftw]

a