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Dental School Student Loan Refinancing

September 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 dental school debt was $292,169 in 2019, with 39% of indebted dental school graduates reporting student loan debt of more than $300,000. This average debt is over 5x 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 a Dental Specialty

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 degrees within four years and become licensed. 


They’ll also have to undergo more schooling in addition to their general practice or specialty dental residency if they want to pursue one of the ten recognized specialties:


  • Public Health Dentistry 
  • Pediatric Dentistry
  • Dental Anesthesiology
  • Orthodontics and Dentofacial Orthopedics
  • Periodontics
  • Prosthodontics
  • Oral and Maxillofacial Surgery
  • Oral and Maxillofacial Pathology
  • Endodontics 
  • Oral and Maxillofacial Radiology


Each of these decisions can be heavily affected by the anxiety of accumulating more debt, often leading students to settle in their career choice. 


Accumulating Student Loan Interest

If you decided to take the route mentioned above and end up with the average amount of dental school debt (about $292,000), you’ll be facing monthly payments of $3,242 on a standard 10-year repayment plan, assuming a 6% interest rate (the rate for federal graduate unsubsidized student loans disbursed between July 2019 to July 2020). And it gets worse – if you paid your loans over this 10-year term, you would pay $97,015 in interest alone – making the total cost settle somewhere around $389,000. 


On the bright side, however, when dental students enter the workforce, they often have the advantage of earning income more quickly than graduates in other fields. This makes dentists great candidates for student loan refinancing, especially by refinancing when national interest rates are low.


For dentists, earning a lower interest rate through refinancing could mean saving thousands over the life of their student loans.


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 Until Dental School Debt is Worth it?

While dental school graduates are generally high earners after entering the workforce, such significant amounts of student loan debt beg the question: is it worth it? The answer, for most dentists, is a resounding “yes,” especially when they’re able to refinance their student loans to earn a lower interest rate.


In addition to a lower interest rate, student loan refinancing offers the opportunity to extend the selected student loan repayment term. This means dental students can lower their monthly payments to accomplish more pressing financial goals, like buying a home or launching a dental practice. On the other hand, as high earners, dentists who choose to shorten their student loan repayment terms will have the opportunity to pay down debt more quickly and pay less interest over the life of the loan.


Consider How Long it Will Take to Make Back Your Investment

When taking into consideration missed earnings, a dentist who graduated with the average amount of debt ($292,000) will have invested about $472,112 into dental school. This is assuming they would have made $74,000 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 $119,000 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:


chart explaining the amount of time it would take for dental school to payoff vs. not attending dental school

Source: https://studentloanhero.com/featured/dental-school-debt-worth-it/


The bright side? That dental school investment is generating an extra $25,000 in income by the 5-year mark, and that differential will likely continue to increase.


How to Refinance Dental School Loans

Fortunately, the refinancing process for dental school graduates is relatively easy. Especially for individuals not taking advantage of federal benefits or planning to pursue public loan forgiveness, then there are very few drawbacks to refinancing dental school loans. 


Refinancing is a great way to decrease the amount of interest paid over the life of the loan. Dental school graduates should take the following steps to refinance student loans:

  1. Find out if you meet student loan refinancing eligibility requirements
  2. Get an interest rate quote
  3. Compare interest rates from multiple lenders
  4. Submit a student loan refinance application


How to Pay off Dental School Debt Faster

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, and your remaining balance will be forgiven at the end of your repayment period.


Some federal income-driven repayment plans offer student loan forgiveness after a certain length of time. It’s important to note, however, that unless otherwise stated, the borrower is still responsible for paying taxes on the amount forgiven. Dental school graduates pursuing this type of student loan forgiveness should consider how much the tax burden will impact the total cost of their loan.


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.


Refinancing is an alternative strategy for dental school graduates who are interested in a straightforward process that’s likely to decrease the interest rates on their loans. Student loan refinancing also offers the option to change your student loan repayment term to focus on accomplishing long-term financial goals, whether that be repaying debt quickly or earning more financial flexibility month-to-month.


Earn Additional Income Working Locum Tenens

Working Locum Tenens means working in a temporary position, often filling in for another dentist or completing a short-term assignment. Some dentists and medical professionals prefer this type of work because of its flexible nature. Others choose to do Locum Tenens work as a way to save toward financial goals or to pay down student loans more quickly. 


Locum agencies may also cover housing and travel costs for travel assignments for individuals who are interested in budget-friendly travel opportunities.


Pay More than the Minimum Payment

Because dentists are often high earners, even immediately after entering the workforce, they may have the opportunity to pay more than the required minimum on student loans each month. Paying more than the required minimum is a great way to decrease the amount of interest accrued over the life of the loan.


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. 


Dental school graduates are often fantastic candidates for student loan refinancing, as most meet the standard student loan refinancing eligibility requirements. Even with significant amounts of student debt, dental salaries begin relatively high, meaning many dentists have high credit scores and low debt-to-income ratios. If you’re interested in paying down your student loans quickly after graduating, student loan refinancing may be an excellent choice.


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.


When to Refinance Dental School Debt

As a best practice, you should refinance student loans after you’re certain you won’t be taking out additional loans for school. For most dental students, that means refinancing either:

  • During residency
  • After completing residency


Before refinancing your dental school loans, be sure to consider your credit score and debt-to-income ratio to ensure you have the best possible chance of being approved for a low-interest loan. If you’d like to improve your debt-to-income ratio, focus on paying down high-interest debt, like credit card debt.


Refinancing During Your Dental Residency

Some dental residency programs offer stipends to help students lay a strong financial foundation. If your program offers a stipend, you may consider refinancing your dental school loans at a repayment term that works well for you.


If your residency charges tuition, however, it may be wise to wait until you’re no longer paying educational costs to focus your energy on your student loan payments.


Refinancing After Your Dental Residency

After your dental residency, you may be more likely to have a better credit score and higher income, as well as clearer career goals. If you’ve already completed your residency and are ready to explore student loan refinancing, now could be the perfect time to learn more about your options.


Refinance Your Dental School Loans with ELFI


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. With both variable and fixed rate refinance loans available, you can discover which type of loan is right for you.


Additionally, with ELFI, you’ll be able to focus all your energy on paying down debt. To make your experience seamless, ELFI charges:

  • No application fees
  • No origination fees
  • No prepayment penalties


Have questions? We’d love to tell you more about the benefits of student loan refinancing. 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.


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Happy couple admiring their home
Should I Build Home Equity or Pay Down Student Loans?

Owning a home is a goal for many people. In fact, 40% of young millennials are saving to buy a home. If you already own a home, congratulations on achieving your goal! If you are now faced with a mortgage and student loans, you may wonder which debt you should prioritize. Should you build home equity or pay down your student loans?    Here we will explain what home equity is, how to build it and when it’s better to focus on home equity or paying down student loans.   

What is Home Equity?

When you pay on a mortgage, even if you haven’t yet paid it off completely, you’re building equity in your home. Home equity is the difference between the market value of the house and what you owe. Here’s an example of how to calculate it:  

How to Calculate Home Equity

  You can calculate your home equity by subtracting the balance of your mortgage from the current value of your home. The value of your home is determined by the fair market value of your house or the appraised value. This number is the true value of your asset (your house) since it takes into account the amount you owe on the loan.    Your home equity is calculated in your net worth. You may have heard that home equity can be “tapped into.” This means you can borrow against the equity of your home and use the money in a variety of ways. A home equity loan can cover home renovations or pay off higher-interest debt.    Your home is valued at $375,000 and your mortgage balance is $275,000. You determine the equity by taking the value of $375,000 and subtracting the mortgage balance of $275,000. The equity in your home is $100,000.   

Home Equity and the Housing Market

  Your home’s equity often increases when you make mortgage payments, especially when paying down the principal on your loan. Your home’s equity can also increase when its value rises. Although the value is determined primarily by the housing market, you can raise the value through home improvements.   Just as the value of your home can increase based on the market, however, it can also decrease based on the market. The only sure way to increase your home equity is by paying down your mortgage loan. The more of the loan you pay off, the more your equity increases.  

Building Home Equity vs. Paying Down Student Loans

  If you follow the normal payment schedule, you’ll increase your home equity slowly. If you make extra payments towards your mortgage, you can build equity faster. However, if you also have student loans, should you build home equity or pay down your student loans instead? Let’s take a look at some factors that can help determine the best course of action:   

Interest Rates

If either your mortgage or any student loan has a variable interest rate, you may want to focus on that loan first, because you are at risk that the rate can rise and leave you with a higher payment to make. In addition, if one of your loans has a much higher interest rate than the other, you may choose to focus on it first.  


With student loans, in certain instances, if you are facing financial hardships you can temporarily suspend payments. Mortgages offer less flexibility with payments, therefore missing payments can result in foreclosure and losing your home.  

Loan Balances

If you have student loans with lower balances than your mortgage, you may be able to pay them off more quickly. Then, you can continue to build equity after paying down your student loan debt.   

Tax Implications

You may get a bigger tax break by building equity versus paying off student loans. However, this doesn’t apply to everyone. Interest paid on student loans is deductible, however, there is a cap on how much. As of 2020 the cap is $2,500. Your income must meet the requirements to be able to deduct this amount.    Interest paid on mortgages is also deductible, but only if you itemize your deductions. The mortgage interest deduction can be much higher than $2,500. To learn more about either of these options, consult with your tax advisor.  

Refinancing Your Student Loans With ELFI

If you don’t want to choose between building equity or paying off your student loans, then consider refinancing your student loans with ELFI. Use our student loan refinance calculator* to see how much you may be able to save.   

The Bottom Line 

Each person’s financial goals and situation are unique, so you have to make the best decision for you. Hopefully, however, knowing more about both options and which is better in certain circumstances will help you make an informed decision.  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no­­­ control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.   *Subject to credit approval. Terms and conditions apply.
Engineering School Student Loan Refinancing

Student loan refinancing is a fantastic option in many high-earning professions, and engineering is no exception. Most engineering students pursue bachelor’s degrees, and the average engineer’s student debt falls roughly in line with the national average of $35,173.    While engineers work hard to earn their degrees, the payoff is oh, so worthwhile. The average entry-level salary for engineers is $57,506, and the average salary across all experience levels is $79,000. This varies by the type of engineering you choose, as well. Big data engineers are among the highest-paid in 2020, with a median salary of $155,000.   Engineering students are often top candidates for student loan refinancing because of their low debt-to-income ratios. Here are a few more things you should consider refinancing your engineering student loans:  

Benefits of Student Loan Refinancing for Engineers

Student loan refinancing is a strategy that can help engineers better manage and pay off debt. When you refinance your engineering student loans, a private lender will “purchase” your debt from your original lenders. You can request rate quotes from several different lenders, then refinance with the one that offers you the most competitive rate. Decreasing your interest rate means you’ll pay less over the life of the loan.   Here are just a few of the benefits of student loan refinancing for engineers:
  • Ability to consolidate student loans into one monthly payment
  • Option to choose between fixed and variable student loan refinancing interest rates 
  • Chance to earn a lower interest rate, potentially lower than federal student loans 
  • Opportunity to change your student loan repayment term
  To see how much you could save by refinancing your engineering student loans with Education Loan Finance, try our Student Loan Refinance Calculator.*  

How to Refinance Engineering Student Loans

Refinancing your student loans is normally a quick and simple process, and you can apply in minutes at home. If you’re curious about the process of refinancing, take a look at our student loan refinancing guide.   Researching lenders has very few downsides. Most lenders prequalify applicants using a soft credit check, which won’t hurt your credit score. Just know that before you can officially refinance your loans, your lender will likely need to do a hard credit check.   Here are the next steps to take if you’re thinking about refinancing your engineering student loans:
  • Figure out which how much or which loans you’d like to refinance. 
  • Make sure you meet student loan refinancing eligibility requirements.
  • Shop around and compare pre-qualified rates from multiple lenders. 
  • Submit an application to refinance your student loans 
  • Finalize the loan application by reviewing the loan terms & signing the documents provided by the lender. 

Alternatives to Pay Off Engineering Student Loans

If student loan refinancing doesn’t seem like the right fit, you have plenty of alternatives to explore. From student loan assistance to student loan forgiveness, engineers may qualify for a variety of repayment options.  

Student Loan Forgiveness for Engineers

  Select engineers may qualify for Public Service Loan Forgiveness (PSLF). If you do qualify, you’ll make payments for a specified amount of time, normally 10 years, then the remaining balance will be forgiven. You will, however, still have to pay taxes on the forgiven amount.   Here are a few ways in which engineers may qualify for Public Service Loan Forgiveness:
  • Working in areas of national need could provide up to $10,000 in loan forgiveness over five years of service
  • Working for a non-profit, government agency, or other eligible employers could provide loan forgiveness after 120 payments (10 years)
  • Working as a teacher could provide up to $17,500 in loan forgiveness if working at a low-income school or other eligible agencies
  If you aren’t sure which is right for you, research student loan refinancing vs. PSLF. While both may help decrease your debt, it’s important to know how they compare before taking the next steps.  

Income-Based Repayment Plans

If you don’t qualify for Public Service Loan Forgiveness, you may also choose to pursue an income-based repayment plan. These types of plans set a monthly payment as a percentage of your income. Income-based repayment may be a good fit for entry-level engineers who are still working toward higher salaries.   Here are a few types of income-based repayment plans available to engineers:
  • Pay-as-You-Earn (PAYE): PAYE plans are based on a percentage of your adjusted gross income and family size. They are available to individuals who borrowed after 10/1/2007, or those who received eligible Direct Loan disbursements after 10/1/2011.
  • Revised Pay-As-You-Earn (REPAYE): REPAYE plans are similar to PAYE plans, but do not have date restrictions on the loans. They do take your state of residence into consideration, however.
  • Income-Based Repayment (IBR): IBR plans require you to be experiencing financial hardship. If you qualify, they are based on a percentage of your adjusted gross income and family size.
  • Income-Contingent Repayment (ICR): Many individuals who can’t qualify for PAYE or IBR plans apply for ICR. These start as a percentage of your adjusted gross income, then grow as your income grows.

State Student Loan Assistance Programs

Engineers are highly valued in the professional world. Some states and private organizations have created student loan repayment assistance programs for STEM professionals, with the goal of encouraging students to pursue these careers.   If you’re an engineer looking for student loan assistance, here are a few examples of state-driven programs you may be eligible for:
  • Harold Arnold Foundation
  • Wavemaker Fellowship
  • North Dakota DEAL Loans

Employer Student Loan Repayment Assistance Programs

Some employers provide student loan repayment assistance as a job benefit, which operates similarly to a 401(k). You designate a certain dollar amount to your student loan payments each month, and your employer matches your contribution up to a cap amount. These types of benefits can help improve employee retention rates while supplying necessary financial aid.  

Refinance Your Engineering Student Loans with ELFI

If you’re ready to refinance your engineering student loans, ELFI can help. By refinancing your engineering student loans with ELFI, you’ll enjoy benefits including:
  • No application fees 
  • No origination fees
  • No penalty for paying loans off early
  • If approved for refinancing, ELFI has a referral bonus program
  Ready to get started? Learn more about student loan refinancing with ELFI and apply today: https://www.elfi.com/student-loan-refinancing/.*  
  Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no­­­ control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.   *Subject to credit approval. Terms and conditions apply.
Current LIBOR Rate
Current LIBOR Rate Update: October 2020

This blog provides the most current LIBOR rate data as of October 19, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog, LIBOR: What It Means for Student Loans.


What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.


How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.


LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.


Current 1 Month LIBOR Rate – October 2020

As of October 19, 2020, the 1 month LIBOR rate is 0.15%. If the lender sets their margin at 3%, your new rate would be 3.15% (0.15% + 3.00%=3.15%). 


Current 3 Month LIBOR Rate – October 2020

As of October 19, 2020, the 3 month LIBOR rate is 0.24%. If the lender sets their margin at 3%, your new rate would be 3.24% (0.24% + 3.00%=3.24%). 


Current 6 Month LIBOR Rate – October 2020

As of October 19, 2020, the 6 month LIBOR rate is 0.25%. If the lender sets their margin at 3%, your new rate would be 3.25% (0.25% + 3.00%=3.25%). 


Current 1 Year LIBOR Rate – October 2020

As of October 19, 2020, 2020, the 1 year LIBOR rate is 0.35%. If the lender sets their margin at 3%, your new rate would be 3.35% (0.35% + 3.00%=3.35%). 


Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.


*Subject to credit approval. Terms and conditions apply.


Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.