The Reality of Dental School Debt and How to Manage itSeptember 23, 2019
Choosing to become a dentist is an admirable decision, no matter how you look at it – from helping improve patients’ appearance and self-confidence to teaching patients how to achieve oral health and prevent disease, a dentist’s work goes beyond the chair and impacts lives.
With this being said, the burden undertaken by dental professionals is often overlooked when considering the seemingly hefty salaries associated with the career path. By “burden”, of course, we mean the hefty amounts of student loan debt. According to the American Dental Education Association, the average debt per graduating dental school senior was $285,184 in 2018, with over 80% of dental school graduates facing over $100,000 of student debt. This average debt is over 4x higher than it was in 1990.
This staggering level of debt may seem overwhelming at first, but rest assured that with a little research, planning, and use of resources, dental school debt can be tackled – but first, let’s look at how this debt impacts individuals pursuing a career in dentistry.
Difficulty Choosing Career Path
Massive debt often makes it difficult for aspiring dentists to choose the career path they truly want. To begin with, the majority of dental schools require a bachelor’s degree to attend. Already carrying undergrad debt, full-time dental students can then expect to finish their dental degree within four years and become licensed. However, if they want to pursue one of the nine recognized specialties, they’ll have to undergo more schooling in addition to their general practice or specialty dental residency. Each of these decisions can be heavily affected by the anxiety of accumulating more debt, often leading students to settle in their career choice.
If you decided to take the route mentioned above and end up with the average amount of dental school debt (about $285,000), you’ll be facing monthly payments of $3,800 on a standard 10-year repayment plan, assuming a 6% interest rate (the rate for federal graduate unsubsidized student loans disbursed between July 2017 to July 2018). And it gets worse – if you paid your loans over this 10-year term, you would pay $171,000 in interest alone – making the total cost settle somewhere around $456,000.
Difficulty Starting Career
Because of the overwhelming amount of debt new dentists face, starting their career isn’t a stress-free experience. New dentists often have to work through lunch, take more patients and take less time off to accelerate the repayment of their loans. This can lead to exhausting patterns that cause burnout. Not to mention, a large portion of dentists begin dental school with the end-goal of starting their own practice, and this cost can easily surpass $250,000. Recouping this cost while trying to pay off debt can be extremely burdensome. However, choosing the route of starting a private practice is the fastest way to start paying down debt. Private practitioners typically earn higher incomes and have more earning potential than dentists working for another organization.
How Long Does it Take for Dental School to Pay Off?
When taking into consideration missed earnings, a dentist who graduated with the average amount of debt ($285,000) will have invested about $570,000 into dental school. This is assuming they would have made $55,000 per year that they were in dental school (the average pay for a Bachelor of Science degree in chemistry, which is common for pre-dental graduates).
This table from Student Loan Hero shows that with a typical entry-level dentist salary of $118,800 and a five percent yearly increase in earnings, it would take about eight years for a dentist’s earning potential to offset the cost of dental school:
The bright side? That dental school investment is generating an extra $90,000 in income by that 8-year mark, and that differential will likely continue to increase.
Pay Off Dental School Debt Sooner
Despite the quantity of debt associated with dental school, the consensus is that paying it off is achievable. Depending on your situation, there are specific actions you can take to make paying off your dental school debt more manageable. If you can’t afford monthly payments and don’t mind paying for an extended period, you can apply for federal income-driven repayment. This will likely extend your payment term from 10 years to 20 or 25 years, but your remaining balance will be forgiven at the end of your repayment period. For dentists working in the public sector, specific underserved areas or non-profits, you may qualify for Public Service Loan Forgiveness. This program offers tax-free loan forgiveness to borrowers who pay on their loans for 10 years while working in one of these areas. Keep in mind that less than 1 percent of student loan borrowers who applied for the PSLF program have qualified, so it may not be as simple as it sounds.
Tackle Debt Quicker and Pay Less by Refinancing
If you’re in a position where you’re not happy with your interest rate, have solid credit, and want to reduce the amount you’ll pay monthly and over the lifetime of your loan, refinancing your dental school loans is probably your best bet. This is especially true if you’re having success in the dental field and want to pay off your loans quickly. While refinanced loans aren’t eligible for income-driven repayment or Public Service Loan Forgiveness, they can significantly reduce your interest rate, in turn reducing your monthly and lifetime payment.
In clearer terms, let’s say you have $200,000 of student debt from dental school and are paying 6% interest on a 10-year term. Your monthly payment would be about $2,666 and you would pay $320,000 over the lifetime of your loan.
Refinancing to a 10-year loan term at a 4% interest rate would save you $40,000 in total and reduce your monthly payment by $333. Your new monthly payment would be $2,333 and you would pay $280,000 over the life of the loan.
Education Loan Finance offers great rates when it comes to refinancing dental student loans – Check out our student loan refinancing calculator to see how much refinancing your dental school loans with ELFI could save you.
Have questions? Our Personal Loan Advisors are available to guide you through every step of the refinancing process. Give us a call at 1-844-601-ELFI and see why we’ve been voted #1 in customer service for student loan refinancing.
*Subject to credit approval. See Terms & Conditions. Interest rates current as of 9/16/2019. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.
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