Written By Travis Hornsby, CFA, CFP®
A 2022 U.S. News ranking of the 100 best jobs of 2022 places dentistry among just outside of the top 10 jobs in America. This is the first time in several years it has fallen out of the top 10. Is it time to panic about the profession of dentistry?
The report ranks occupations on a list of seven different factors, including the average dentist salary earnings, but none address the cost of dental education and the student loan debt that comes with it. For new dentists, your dental school dean probably sold you a bill of goods.
Please tell us what schools told you about loans in the comments. I'd love to compare your stories and so would the other folks hanging out here. There are all kinds of BS cliches floating around dental schools these days. I'm here to challenge them.
Why Dental School Debt Makes Success Harder in Dentistry
So many people ask me “Is dental school worth it?” Yes, dentistry can still be a lucrative and wise financial decision. And the average dentist's salary isn't bad at all.
However, for many new dentists, the margin of error is smaller than it has ever been before. For many dental school graduates with over $400,000 in negative net worth, the only way to make dentistry worth it is through practice ownership.
Yes, dentists hire me to make a comprehensive plan to save money paying back their student loans. Before I get accused of trying to sensationalize the dental school loan problem for profit, realize that the worse this problem gets, the more clients Student Loan Planner® stands to have.
I do this job because I love helping dentists save money and increase the return on investment for their education. I want to add a dose of realism to the profession and speak up against widely held public perception.
Paying Back Dental School Debt Would Take Drastic Measures for Most
No, you will not repay your dental school loans in five to seven years, despite the average dentist salary. Your education was most likely not a wise financial investment compared to alternative paths available to someone smart enough to get into a dental program.
UNLESS… if you buy a $800,000 practice in an area with a 5000 to 1 population to dentist ratio, hire consultants to grow the practice, and work your tail off with smart financial planners and CPA's around you, then forget what I said about dentistry not being a good decision. It could be one of the best careers out there.
The problem is that you have to be comfortable living with a large amount of debt and a high monthly payment, which leaves a narrower path to success than back when dental school cost $5,000 a year. If you're wondering if dental school is worth it, you must consider these costs.
It's the Delta Dental, DSO, and debt age of dentistry
The economics of the profession are not the best they've ever been. If only I had a dollar for each time a client told me that their dean spouted that off in a speech.
Delta Dental and other PPO insurance plans have crushed average incomes. A typical dentist made over $200,000 not too long ago.
That number is closer to $140,000 today, according to Payscale data. The difference? Fees are way lower than they used to be because your average dental office accepts a half dozen different providers.
Over the next decade, corporate Dental Support Organizations will replace thousands of small business owners with employees and retain all the profits.
I have a different rating system for the folks over at US News and the thousands of young dentists and soon-to-be dentists graduating in the next several years from public dental school or from private dental schools.
Being a dentist is the number 1 job in America for debt. Keep reading to the end though, because it doesn't have to be.
Dentistry education debt is crushing in magnitude
In my flat fee student loan consulting practice, I help professionals from all different backgrounds. I've consulted with surgeons, primary care docs, veterinarians, psychologists, nurses, teachers, lawyers, chiropractors, pharmacists, business owners, dentists, and more.
Dental student loans are on another level and the high costs are crushing. Dentistry debt stands out because it is consistently the highest in absolute dollars of any profession I see. Check out this video below to see an example of how I help a dentist save money on their school loans.
The average dental school debt of the 354 dentists I've consulted with is $379,742. Their average salary has been about $150,000 (U.S. News lists the average dentist salary at $155,600).
If I restricted that to dentists either currently in school or who graduated in the past couple of years, the average debt would be closer to $450,000 and the average income would be closer to $120,000.
Read also: Published Cost Estimates of Dental School Are Totally Wrong
Dental education debt is also almost impossible relative to salary
So say you use my average debt and income figures for recently graduated dentists.
A typical debt to income ratio for dental education debt is therefore $450,000/$120,000=3.75. There is almost no scenario where an individual can repay this level of debt, no matter the average dentist salary.
The only path to full repayment in this scenario is owning a practice in an area where most dentists probably don't want to live. If you disagree, that's cool. Let's debate it in the comments.
There is a wide distribution around these typical numbers of course. Many dentists coming out of public programs have between $250,000 and $300,000 in student loans and are on a path to repay everything within 10 to 15 years.
However, some others from private schools owe well over $500,000. I've even consulted with some specialists graduating from residency programs who owe close to $1 million for their education.
Can you find some success stories of dentists who've moved to a rural wealthy enclave in the middle of nowhere making $400,000 a year three years out of school? Sure. I've worked with several of them. We refinanced their student loans and saved them tens of thousands in interest.
However, even these ‘unicorn' dentists would've probably been even more successful as non-dentist business owners. You also can't make an argument in favor of a profession based on how well the 0.1% are doing.
You have to look at the vast majority of cases and look at the typical result. For the thousands of dentists doomed to toil in associate positions for most of their career, that result isn't pretty.
Without the government income-driven repayment programs to fall back on for federal student loans, I estimate that 50% of today's graduating dentists would default on their loans.
That's not a stable occupation with great pay. It's one where you have an anvil hanging over your head that you're glad hasn't dropped yet. Ironically, the only way to get out of this situation is by taking on even more debt to become your own boss as a practice owner.
Read also: Five Ways Dentists Can Protect Themselves Against Student Loans
Dentistry is the Most Expensive of Any Professional or Graduate Program
Finishing medical school is cheaper than completing a dental program. Many people even get scholarships. If you have a high balance, you can use Public Service Loan Forgiveness to pay a fraction of what you borrowed.
Veterinary school is unbelievably expensive, but dental programs and the cost of tuition still wins as the number 1 most expensive professional program. I've never heard of a vet med student being asked to spend $5,000 for a DVD with books on it. The total cost of a dental education is unmatched.
Some of the dentists I've spoken to tell me they've seen way worse stewardship of their money in school than that.
Law school, psychology PhD programs, pharmacy school, and other graduate degree programs do not hold a candle to the absolute magnitude of the cost of becoming a dentist.
Yes, owing $200,000 and not being able to find a job as a lawyer sucks, but at least it's just $200,000.
Once you owe over $400,000 for your dental education, you're not going to be able to afford to have another “find yourself” period of life, despite the average dentist salary, especially if you have private student loans. So if you're wondering “is dental school worth it?”, think long and hard about it.
That's a real cost, and hopefully, the admissions process weeds that out for the most part. Still, I know from consults that there are folks that would like to try something else in life besides dentistry and they can't because they have such a huge debt load the size of a mortgage.
Read also: Dentists Get Drilled on Student Loans
To US News and Others Who Believe Dentistry is the Number 1 Job in America, Look at a Couple of $500,000+ Loan Burdens
I jokingly wonder if deans at the more expensive dental programs take up a collection plate for US News for keeping talk of debt under wraps. There is a massive student loan bubble waiting to pop, and dentistry is near the top of the list.
The only thing supporting it is the income-driven repayment plans that allow folks to pay a fraction of what's owed. Change access to these income-driven plans, and there would be a crisis in the field.
Say US News adjusted their rankings for average debt level after graduation. Dentistry would not be the number 1 job in America. It might not even be in the top 100.
Praising dentistry as a high-income occupation with a great average dentist salary without mentioning student debt is like praising an owner of a 10,000 square foot home for his wealth without mentioning that the entire thing is mortgaged.
Practice Loan Quote Form
A DDS or DMD is a Very Valuable Asset, Which is Why People Keep Paying Ever More Ridiculous Sums of Money for It
Am I being a little over the top in this post? Sure I am. Dentistry is a lot more secure from recessions, layoffs, and automation than the vast majority of jobs. There will always be a need for dentists. Folks with intense pain will always be willing to pay a lot to get it to stop.
That's why there are so many people willing to pay premium prices that rise ever higher. There is an absence of private investors putting a cap on the borrowing limits for a dental program.
Hence, the government lends without limit and schools raise their prices to claim that money from borrowers willing to sign their names to the paper.
Is this fear-mongering just to generate business for my student loan consulting firm? No. Again, large student debt burdens are great for my business. I'm actually trying to scare away dentists from signing up as an associate at a DSO for 30 years. If you read this challenging of an article and know you still love dentistry, I'm encouraged.
Dentistry can still be rewarding, but you have to play great offense AND great defense. I specialize in the defense part of the equation.
I optimize student loan strategy for dentists so you aren't making big mistakes and paying thousands in unnecessary interest. That happens about 90%-95% of the time.
Don't Lose Heart. There is a Path Forward in Dentistry
If you're a talented young dentist, don't lose heart. I speak with dentists all the time and help them come up with a plan to tackle their student debt.
Yes, the cost of completing your dental education is outrageous. However, once you have the debt, the only route is to evaluate the best options for repayment to save the most money. Then you act on it.
I save the average dentist over $100,000 over the life of their loan payback. Most dentists leave a ton of money on the table with their student loans, and I want to pick it up and put it back in your pocket.
What do I do? I make sure you're not paying a ridiculously high interest rate when you could qualify for a much lower one. I also take a look at the actual simulated cost of the various income-driven repayment options so you'll know a personalized estimate of the tax penalty associated with loan forgiveness.
We'll talk about how to set up your student loans for maximum advantage regardless if you're a practice owner, an associate, or a fourth-year dental student.
I've spoken with everyone from brand new grads barely making $100,000 in a major metro area to DentalTown ballers making over $500,000 opening a second practice less than three years out of school. All of them had opportunities to save money on their student debt.
Even though I've spoken with some wildly successful dentists making much more than the average dentist salary, most rely on income-driven repayment to cover the cost of their dental education.
Is Dental School Worth It, Really?
Until the public realizes the truth that most new dentists aren't paying off their debt in 3 years and driving a Porsche, there will continue to be dozens of applicants for every spot in dental programs.
Once the word gets out or the federal government cuts off the unlimited dollars available in loans for dental degrees, I think we'll see a crisis of epic proportions on our hands. Until that happens, maybe US News meant to say that the number 1 job in America is being Dean of a Dental School. To me, if you're asking is dental school worth it, my answer is not as much as you might think.
Refinance student loans, get a bonus in 2023
| Lender Name | Lender | Offer | Learn more |
|---|---|---|---|
|
$1,000 Bonus
For 100k or more. $200 for 50k to $99,999
|
Fixed 5.24 - 9.59% APR
Variable 6.24 - 9.99% APR
|
|
|
$1,000 Bonus
For 100k or more. $300 for 50k to $99,999
|
Fixed 4.96 - 10.24% APPR
Variable 5.72 - 10.24% APR
|
|
|
$1,000 Bonus
For 100k or more. $200 for 50k to $99,999
|
Fixed 5.19 - 9.74% APR
Variable 5.99 - 9.74% APR
|
lol this article makes me laugh. So having 250k of school debt and making 200k a year 5 years out of school is a bad investment? Not sure you’re the financial advisor I’d look to for advice.
For dentists graduating between 2017 onwards, I don’t think those numbers are at all representative of the average experience. The average dentist makes $170,000 a year including all the private practice owners. If you’re starting out as a corporate associate, it’ll start around $120,000 and gradually increase over several years maybe to $150,000 depending on the practice. Others can feel free to verify this for me. Also a dentist graduating in the next 4 years is going to have around $300,000 in debt on average, not $250,000. Private schools will have a lot more too. That debt number includes folks getting assistance from families or spending down savings but still borrowing some themselves. If you exclude those folks, the average debt is even higher
I agree with this. 120k is pretty standard for new grads in the corporate world. Especially in areas where the market is saturated. I work at a corporate office in Portland, OR, and can see the numbers of about 25 dentists in the company in my area. We are making 25% of production and about half these dentists are producing around 1500-1800 daily. There’s no way you can pay off your student loans in an urban area, where the cost of living is high, making 375-400 dollars a day. Not happening. Maybe if you move to Timbuktu where you’re the only dentist you can make a lot. But that’s not feasible for everyone
I wonder DMD503 how fast the percentage of dentists employed at a corporate office has grown in the major metro areas. Someone told me anecdotally that a DSO went from 10 offices to like 60 in Atlanta over only a couple years. Seems like corporate dentistry is exploding.
They are growing like wildfire. There’s a DSO on every corner here. It’s a good option for new grads to get their foot in the door but it’s hard to make ends meet when you are doing discount dentistry with low compensation. Most DSO’s target a certain demographic- low to mid-range income. I think there is still a place for private practice. For people who want an experienced dentist (most dso’s hire new grads) or just don’t like corporate dental offices. But it’s definitely getting harder and harder for private, especially the ones targeting the same patient population as the DSO.
@DMD503 have you seen DSOs doing good work in bringing down the cost of dental procedures for underserved populations? Where have the DSOs not done a good job in your view? Obviously working for one isn’t a good financial decision compared to practice ownership
You’re not taking the high 12%+ interest rates into account. It’s a crippling amount of debt compared to new grad income. I work in the dental profession and have witnessed much of this in my city.
12 percent? Can you go into more detail on this Megan?
Not sure why this article made the person laughed, this was a great article and very accurate with what most med/dental grads experience.
I am a medical school grad with $509,000 in pure medical school debt (originally $350k, but with 7% interest after med school and 3 years of residency, it ballooned). My wife is a DMD from a private school and luckily has no loan debt. She makes ~$70k salary as a 3rd year associate previously working for corporate (PDS) now at a county dental program working 3 days a week. This dental debt is what drives dentist to practice aggressive dentistry so they can pay back their loans, unfortunately this also builds massive distrust in the public.
What people don’t get is interest is what guts you. People don’t understand that FEDERAL grad loan interest rates are much higher than undergrad (6-11% compared to 3-5%). Most med/dental grads are in their early 30’s before they start making real money. We have no equity, no house, no savings, no retirement plan, etc; just pure soul crushing debt. Everyone thinks dentist and docs live lavishly, maybe 20 years ago before grad school became comically expensive. I drive around in a 10 year old Prius that I got used and I don’t plan on upgrading anytime soon.
I owe $4000 a month in student loans with the potential of paying it off in 25 years on a REPAYE repayment plan. I am too scared to refinance as I hope that one day student loan interests will decrease or possibly be forgiven. I have 2 young kids and unless the cost of medical education changes, I will strongly advised them against a career path related to medicine/dentistry.
If you ever need a second look on the overall strategy Leo Student Loan Planner would be happy to help review it! Glad you enjoyed the article.
I came across this article and wanted to share my thoughts/story. I graduated dental school and then residency in 2017. At that time, I was looking at an overwhelming total of $566,000 in student loan debt. It was really stressful to look at that number. However, reducing that number was a priority, and I worked 6 days a week for the next 2 years. I refinanced my student loan 2 years ago with SoFi for an interest rate of 4.625%, and as of today, have paid down my student loan total to $300,000. I was able to do this by not only making monthly payments, but also making additional bulk payments from my earnings. During that span, I was also able to save up enough from working to now be able to pay off that $300,000 entirely if I choose to. However, I decided instead to refinance again and now have an interest rate going forward of 3.23% fixed for the remaining $300,000. This is on a 5-year term. By doing this, I will only pay roughly an additional $25,000 in total interest over the entire 5-year term. I would rather do this, instead of paying off the loan and thus reducing my savings. I don’t consider myself special in any way. I just had a game plan, and worked hard towards it, and still continue to work hard towards it. Nonetheless, it is VERY possible to pay off student loans in 5-8 years, while also living a good life. During this time, my wife and I have taken several vacations, including traveling to Italy, Paris and Hawaii. We both drive what folks would consider to be luxury vehicles. We didn’t own a home during this period, but we are now looking into homes. I will also note that when I graduated residency, my wife and I had a total savings of roughly $20,000. So we did not start out with much. I say all this not to brag in any way, but simply to point out that, with proper planning, and working hard, you CAN live a very good life while also aggressively paying off student loan debt! I love dentistry, and would urge anyone with a passion for helping others towards it.
Great story of perseverance. You might at some point consider a variable rate to reduce that interest rate further. You might be able to reduce it to 1 something and since you can pay it off all at once there’s no risk really. https://www.studentloanplanner.com/refinance-student-loans/
Is refinancing option only available once you’re no longer in school? I’m a 4th year dental student with a crippling debt. I have tried to refinance my loan during the pandemic but either I did not have reported income to do so, or if I have a sponsor it simply said my loan (direct grad PLUS) was not eligible for refinancing
If you have crippling debt, I recommend reaching out to a student loan consultant to get a repayment plan. Student loans shouldn’t be a debt sentence.
To any skeptics out there. Every word of this article is true! I graduated from dental school four years ago with $371,000 in student loan debt. To date, the total principle with exorbitant 6.8 – 8.9% interest rates has ballooned the loans to over $455,000 while making payments under the Income-Based-Repayment program.
Just imagine, the interest on your loans growing by just over $2200/month, all while corporate dentistry is taking over all the small profitable practices out there and starving out the competition. Companies like Aspen, Heartland and PDS come to the dental schools, recruiting dental students and promising the world and $120K salary, but the reality is they are for the most part terrible offices to work in and the salaries only last for a short intro-period. They suck all of the profit out of the practices by paying low wages to the doctor ( 20-25% of your adjusted production (which really means collections which are always lower) ).
If you are thinking you will just buy or build your own dental practice, think again. As total loan amounts increase every year for graduates, banks are much less likely to approve for you a practice loan.
Meanwhile, big dental insurance companies like Delta are chopping reimbursement by 50-75% for the procedures you are working so hard at to make a decent living and be able to pay back these loans. Don’t forget you have to pay 25-60% in state and federal tax before your loan payments because you are a “rich dentist” now.
Graduates paying their loans under the Income-Driven Repayment plans will be forgiven after 20-25 years. Great right?! Wrong, because you will have to pay income taxes on the $1,000,000+ dollars forgiven. If you live in California that could be as much as 60% or $600,000! With the national debt spiraling out of control due to the previous Administration, it is only a matter of time before our tax rates go through the roof unless the current President can somehow make significant changes to the IBR (aka IDR) plans/terms and/or offer much lower interest consolidation.
This is the current dismal truth of most new people entering our profession.
There is a major student loan crisis coming, probably sooner rather than much later. Unless you have a wealthy family member or join the military before dental school, I would advise to goto into another career.
Hey LoanDDS, have you ever looked at switching repayment plans from IBR to something like REPAYE or PAYE? It might make a lot of sense. Could lower the payment and slow the growth of the loan from interest subsidies. That might also help with qualifying for a practice loan, as banks will look at your total debt service payment every month and less so at the total amount you owe in student debt. That’s been my experience with some people in the past as long as their payment is low the banks didn’t care. If you wanted me to take a look feel free to email me at Travis@studentloanplanner.com. I think you might be leaving money on the table
Hey Travis,
A couple years ago, I did attempt to switch to another repayment plan (PAYE) that sounded more appealing, however was deterred by my loan servicer. They told me I could not switch without first withdrawing all of my loans from the IBR program, making a standard payment (Either $5,000 or $10,000 at the time) and then switching the eligible loans to a different repayment plan. I asked if the forgiveness period (25 years, 20 years, etc.) would reset and they thought it would as well.
Long story short, thats why I let it be. Still looking for a better way now though. I will be emailing you soon.
Thanks
There’s also plans like REPAYE that do count the IBR payments towards REPAYE. I think the technical issue is that PAYE has a different forgiveness period. It could actually make sense to switch to PAYE or REPAYE and it depends on your situation. Feel free to hit me up at travis@studentloanplanner.com. What the rep told you is probably accurate, but IBR almost always costs a lot more than the other options if you’re going to go for the taxable loan forgiveness route. Hope that helps!
You are most certainly making a valid point. Private practice owners that serve PPO or EPO plans are also scrambling. Insurance companies like Delta Dental have completely monopolized the system. If a dentist ever dreams of dropping off Delta Dental the patients move over to the next dentist that takes their insurance.
It is a vicious cycle: have the dream profession as a dentist then suffer at the expense of Insurance companies and student loans and practice mortgage etc.
Having a Tripartite membership with ADA,CDA, Local dental society sucks almost $2k / Year and yet not sure what they do for a dentist when it comes to looking at reimbursement rates for dentists. Even a plumber or electrician makes more than a dentist and yet does not have to pay for enormous student loans.
I’ve been working on breakeven analysis comparing plumbers to medical professionals like dentist and you’re right it doesn’t look good for the highly educated.
In some ways yes, PDS offers cerec crowns, so there is some leeway in what we can charge the patient since there is no lab fee. The the “Dental Plan” they offer to patients without insurance, is discounted to about what the average contracted rate for a PPO would be. On top of this, they are frequently offering 20% off promotions. I regularly do crowns for around 600 dollars, which is about half of what the private practices in the area are charging. I’m helping more people get the care they need, but also doing twice as much dentistry for the same reimbursement. The DSO’s definitely have NOT done a good job in compensating their Dr.’s or retaining good ones.
[…] my career. But now I couldn’t help but feel cynical. A more realistic picture is painted in this article instead. I know that it was written by someone who runs a business helping people with student […]
Its the simple math of income vs expenses that many can’t even grasp in their daily lives. Simply doing the return on investment calculations leaves you in shock of what is needed to achieve this profession. Society places too much emphasis on degrees and social standing amongst the population. Honest jobs and even the trades are often looked down upon but they often have very little investment required to attain them that the ROI is very appealing. But people want the flashy cars and flashy houses and that flashy job title.
“My son is a plumber” just doesn’t have the same ring to it as “my son is a dentist”
[…] is the belief that an education is worthwhile at any cost. I recently was reading about the astounding levels of debt the average dentist owes. The author of this article finds the average dentist just starting out has an average of […]
I had always heard Dentistry was an overrated profession. Pretty crazy to see the actual stats.
Veterinarians are a similar profession. Anecdotally, the average Vet I’ve seen graduates with about $400,000 in debt, and can expect to make barely over $100,000.
It’s sad that the allure of a job title pulls people into something that sure smells like a scam.
My avg vet med client has a balance of $300,000. The ones who open their own practices can make $120,000-$150,000 but that’s certainly the exception. Most work in a clinic as an associate and earn between $70,000 to $100,000 for the majority of their career.
Essentially the takeaway message is if you’re going into dentistry, you better be ready to run your own practice or you’ll never break even on the degree.
This doesn’t paint the rosiest of pictures for the profession. My wife is a practicing dentist as an associate. She graduated from a private dental school three years ago with approximately $400k in student loan debt. You highlight some important issues. Thanks for that, but I’d like to challenge a few of your assessments:
“No you will not repay your student debt in five to seven years.”
A dedicated practicing dentist whose sole focus is debt reduction can absolutely pay off this amount of debt in 5-7 years with a dedicated approach. Will it come at the expense of other things? Sure. But if being debt free is important to you, it can absolutely be achieved in this time frame.
A practicing dentist making $120k and graduating with $300k in loans (example numbers you presented in the comments) who had an effective tax rate of 22% (lets round up to 25%) would be left with $90,000 per year to live on. If the borrower did not refinance, a bulk of their loans would be at 6.8% with some perhaps as high as 8.5%. Assuming an interest rate of 7.5% and a repayment period of 6 years, that corresponds to a payment of just under $5,200/mo leaving just over $2,300/mo to live off of. Would that be difficult? Sure. Impossible? Certainly not. Extend the time frame to 7 years, and cut the rate by ~3 points by refinancing those loans and you have a payment of under $4,200 leaving $3,300+ to live on.
“A typical debt to income ratio for dental school is therefore $450,000/$120,000=3.75. There is almost no scenario where an individual can repay this level of debt.”
Using this more extreme ‘typical’ example of $450k debt to 120k income, let’s say this dentist fully funds a 401k, reducing their federal taxable income to $102k/yr. The effective tax rate for this borrower would be just under 18% (lets round up to 20%). This leaves $81,600 to live on. Again, assuming this borrower refinances to 4.5% for a 15 year period, their payments are approximately $3450, leaving over $3300 to live on each month WHILE ALSO maxing out their 401k.
In each case the assumption was that there were no income increases, no other income deductions to reduce their tax rate, and without turning to IBR, PAYE, etc. Change one of a few variables in the borrower’s favor and the situation improves from there.
Is someone living an extravagant life on $3,300/month? No. But that doesn’t mean it’s a near certainty of financial disaster if you’re a recently graduated dentist who is in this level of debt. There are options. Live within your means and take an interest in learning the principles of personal finance.
Your points are fair ones, but how many dentists and their partners do you know who are willing to live on $3300 a month much less $2300 a month? You sacrifice your entire life until your mid 20s and you finally start making a ‘real income’ right when other life demands come at you. Marriage, family, kids, wedding, purchasing a car, house, etc. and it really adds up in a hurry. Add to that the temptation that comes with having every bank in town trying to lend you whatever you want to facilitate more purchases bc you have DDS or DMD behind your name and it’s extremely challenging. I might be a little over the top in the presentation above but it’s intentional bc of how many people tout the idea that dentist is the best high income job out there and very little has been done to challenge the general public’s perception.
Another point is that interest rates for a 15 year best case scenario for a fixed rate right now are around 5.5% not 4.5%. Also the refinancing companies are not going to offer you a good deal because of the unattractive debt to income ratio, so a dentist could not get such a low interest rate even if they wanted to. So $2300 is more accurate of what would be required than $3300. And if you’re going to have to live on 2300 a month that gradually increases to 3000 a month, then perhaps you should’ve gone to community college because you’d have come out ahead. That’s the harsh reality I want prospective dental students to be aware of before choosing dentistry as a profession.
For those folks who already have the debt, the only path is maxing the ROI of the degree by saving them as much money as possible, and that’s where my services come in. In your wife’s case, I’d ask about future career plans and if she wants to be an associate for her career then optimizing PAYE. If she wanted to go into practice ownership then setting up REPAYE with interest subsidies to prepare for practice purchase then refinancing once you can get a good rate bc of your lower debt to income ratio
What are you smoking my friend? You forgot about state income taxes. For example , in CA it would be about 12%. Also, you have to pay SS taxes 6.5% and Medicare tax 3.3%. If you add these 20% to your calculation, your 5-7 years repayment plan sounds as a pipe dream.
The numbers presented included SS and Medicare taxes. Please run the numbers yourself and see. I did not include state income taxes because not everyone has state income taxes. Yes, you’re right that someone in CA who has to pay double-digit state income taxes will have a harder time than someone else who doesn’t. However, a starting dentist in CA is likely to make a different salary than someone in a state without state income tax too.
If we want to nail down a location with regard to taxes, let’s do the same for income and re-run the calculation if you’d like. For example, according to salary.com, the 10th percentile salary for a general dentist in California (meaning 90% earn HIGHER) is over $140k.
Using someone in CA with a $140k income, their take-home pay is $95k (after paying $25k in federal taxes, $10k in FICA, and $10k in state taxes). That coincidentally is about the same take-home pay as the example presented above.
Hi, thanks for the thoughtful reply. You of course bring up some very good points. The price of dental school is very high. Too high. Like I said, we know firsthand. I hope you don’t mind, but I want to thoroughly reply to your thoughts.
“Your points are fair ones, but how many dentists and their partners do you know who are willing to live on $3300 a month much less $2300 a month?”
My only data point is my wife. We don’t live on $3300 per month. Not even close. Then again, we have two children in a HCOL area and we aren’t trying to pay off our debt in only six years and we also have the advantage of a second income, which presumably the partner in your question above would also have. Taking away our debt payments and expenses associated w/ our children, and we spend roughly $5k between the two of us. It doesn’t scale as well down to a single person, but $3300/month for a single person for a few years isn’t that extreme I don’t think. Plus, if in the same time frame the borrower’s income scaled up an extra $20-30k (not at all unrealistic), that $3300 quickly bumps up to over $4 or $5k. I was simply presenting the case for only a single dentist responsible for themselves and the potential to be debt free in 6-7 years with a realistic (though obviously challenging) repayment strategy. It could be done. After that time frame, that dentist would be able to explode their lifestyle up to nearly $100k by themselves if they so wished.
“You sacrifice your entire life until your mid 20s and you finally start making a ‘real income’ right when other life demands come at you. Marriage, family, kids, wedding, purchasing a car, house, etc. and it really adds up in a hurry. Add to that the temptation that comes with having every bank in town trying to lend you whatever you want to facilitate more purchases bc you have DDS or DMD behind your name and it’s extremely challenging. I might be a little over the top in the presentation above but it’s intentional bc of how many people tout the idea that dentist is the best high income job out there and very little has been done to challenge the general public’s perception.”
All absolutely fair points. There’s always temptation for lifestyle inflation. It will come at a financial cost as it relates to paying for your past life decisions.
“Another point is that interest rates for a 15 year best case scenario for a fixed rate right now are around 5.5% not 4.5%. Also the refinancing companies are not going to offer you a good deal because of the unattractive debt to income ratio, so a dentist could not get such a low interest rate even if they wanted to. So $2300 is more accurate of what would be required than $3300. And if you’re going to have to live on 2300 a month that gradually increases to 3000 a month, then perhaps you should’ve gone to community college because you’d have come out ahead. That’s the harsh reality I want prospective dental students to be aware of before choosing dentistry as a profession.”
We financed our loans a little over a year ago for 2.8-3.2% variable rates for loan terms ranging from 5 years to 20 years for a couple with a debt to income ratio of over 2.5. Rates have climbed since that time, but we’re still paying under 3.5%. I chose 4.5% to include some buffer. This is a variable rate, which comes with some level of risk, but if you’re aggressive early on when balances are high the risk drops with each passing payment. In addition, our rates are capped at slightly more than what re refinanced from, so it seemed like an easy decision for us. If you were only comfortable with fixed rates, then of course payments would be higher, though the payment would increase to just under $3700, so your living costs would drop to over $3,100, and not $2,300 as you suggest.
“For those folks who already have the debt, the only path is maxing the ROI of the degree by saving them as much money as possible. . .”
Well said.
Thanks for the dialogue. It’s an important subject that most dentists don’t take seriously until they’re already facing this monumental challenge.
“$3300/month for a single person for a few years isn’t that extreme I don’t think.”
So says the person with two homes and combined expenses of $10,000/month…In Los Angeles, rent, utilities, car insurance and gas prices alone would eat up $3300/month for a single person. Just don’t eat and don’t get sick.
“So says the person with two homes. . .”
The only thing I mentioned having two of are incomes and children.
“. . .and combined expenses of $10,000/month. . .”
I assume this is based on this statement where I said we spend roughly $5k between the two of us after considering costs for loans & our aforementioned children? For clarity, that’s $5k combined. Not each. And for added clarity, that includes all expenses related to our (singular) home.
“In Los Angeles, rent, utilities, car insurance and gas prices alone would eat up $3300/month for a single person. Just don’t eat and don’t get sick.”
Per the US Census, as of 2015 the gross median household salary in LA is right around $50k. After taxes, how does that compare to the $3,300/month that you assert isn’t enough to for a SINGLE person to have enough to feed themselves?
So even cherry picking one of the most expensive US markets and using the average starting salary from the article with no geographic salary differential, I am in need of a Reality Check to think it’s not extreme that a single person could have enough to live on what the median HOUSEHOLD does in that market?
In fairness, almost no dentists and their families would be game to live on that after making the sacrifices they do for the 8 years of schooling minimum post high school. For some they’re sacrificing for even longer if they pursue GPR years or specialty programs. Hard to delay gratification forever, but I do respect the point.
….:Per the US Census, as of 2015 the gross median household salary in LA is right around $50k…..
Yes. One person makes 100K per year and 10 persons make 10K per year. We have median 50K.
The truth is 10K income person has non monetary subsides to cover expenses from AT&T , PG&E, food stamps , housing subsidy , subsidy for free child care and almost free medical coverage through Covered CA. These subsides combine could cost more that $3300.
Now I know why there are crooked dentists preying on the public. My daughter recently relocated and a dentist she saw for the first time told her she had 6 cavities. She went to another dentist for a second opinion and her teeth were fine
Financial desperation definitely has the potential to push people to do things they wouldn’t otherwise. All the dentists I’ve had though have been amazing I must say. Very nice and very fair people
So it might be a bad investment for general dentists looking at $120k starting, but what about those of us entering a specialty looking at $250-300k starting?
In that case you’re also going to be looking at doubling your student debt potentially. Orthodontists and OMFS that I work with have anywhere from $600,000 to $900,000 in debt. Endo and Perio maybe somewhere between $500,000 to $700,000. If you’re going to be in a big city then don’t expect 250k to 300k unless you’re opening your own practice. Many of the orthodontist associates in major metro areas on the coasts are not breaking 250k