I frequently receive emails from NYU dental students that go like this, “I’m in my third year and have to borrow another $90,000 to continue in my program. I’m going to leave with more than a half million in debt. Is there anything I can possibly do?”
While I’m confident we can help people make an optimistic and realistic plan for their student loans no matter the balance, I’d like to address the elephant in the room.
NYU dental tuition is out of control. Something has to give because what I’m seeing in my business from hundreds of NYU professional students makes my blood boil. The following article is my opinion alone.
[Editor’s Note: An earlier version of this article also highlighted the high sticker price of NYU med school as well. I wrote it prior to the announcement that NYU would be paying for tuition for all of its med students. While this is a welcome development, I view it as a strategic play by the school to distract from their role as one of the worst offenders in the student loan crisis. I don’t believe the donors had any other motives than trying to help future physicians and to make a splash with an exciting philanthropic achievement.]
“The Average Student Pays Back Their Loans in Seven Years”
I have had numerous clients and readers who told me that when they applied to NYU, someone in the administration claimed that the average repayment period for dental student loans was only seven years.
Is this possible? Perhaps if you include students from wealthy backgrounds who borrow nothing, or maybe it’s just blatantly false.
Much of the national discussion has been about regulating the banks, insurance companies, or investment firms. Who’s watching the universities who are taking our Millennial generation to the poor house?
Look at this presentation to the class of 2016 on NYU college of dentistry’s financial aid website. They suggest trying to make payments on the accruing interest while still in school to make paying back the loans easier.
That is TERRIBLE advice. If someone can barely afford to pay down the interest, they will struggle ever paying back the loan in the first place and should use an income-driven strategy like PAYE or REPAYE.
*Source: NYU presentation listed on website
After listening to NYU’s financial aid dept, you’ll only have to deal with $500,000 of student debt instead of $550,000. How helpful!
NYU Versus the Reality of Financial Math
The average associate dentist makes around $120,000 to $140,000 (about $80,000 to $100,000 after taxes). The average NYU dental grad that I’ve worked with owes about $550,000.
Even if you could refinance that debt to a 5%, you’d have to pay about $5,800 a month, or roughly $70,000 a year just to make a meaningful dent in the principal.
When prospects and students ask about how they’ll pay back their loans, how can NYU’s dental school say anything but “our graduates from working-class and middle-class families are almost exclusively at the mercy of federal income-based repayment and forgiveness programs for their financial survival.”
Yet students have told me that financial aid and administrators do not tell them that. They even suggest that they’ll “pay it back in no time.” That assertion seems to be at odds with basic math.
“The Cost to Educate a Dental Student Has Just Gotten Higher”
One of the most common excuses I’ve heard from administrations everywhere at dental programs for rising tuition is that “the cost to educate a dentist has soared and that’s why tuition had to go up.”
Another one of my favorites is “federal and state support for higher education has declined enormously, so we had to make up the difference in revenue with higher tuition.”
Yes, inflation happens over time. I understand that faculty want raises and that health insurance costs for staff continue to increase rapidly.
However, at least in NYU’s case, the university owns some of the most valuable real estate in the world, which has only gone up in value. It established locations in Shanghai and Abu Dhabi. Are they unrelated to the finances of the dental school? Perhaps.
My point is that the university is not hurting for money. In fact, I’d argue that the dental school is a big profit center. The tuition increases have little to do with rising costs of equipment or insurance. It’s mostly about an institution that seems to act like a for-profit business.
In my view, the main reason tuition at schools like NYU has soared is simply because they have been able to get away with it. Students don’t say, “you know what, I’d rather not be a dentist because of that sticker price.” Why is this?
- Income-based programs keep students from feeling the full weight of their debt load
- Schools like NYU still have many more applicants than seats
- Publications routinely tout the high incomes and job stability of the dental fields without mentioning the debt
One dentist told me a story about being forced to buy an equipment box at the cost of hundreds of dollars. Meanwhile, a bait and tackle box that basically performs the same purpose can be had for $30 on Amazon.
Others have shared stories about software programs that run in the thousands, textbooks so expensive that you might as well carry around gold instead, and other equipment that seems unneeded or at least wildly more expensive than it should be.
The Student Loan Balance NYU Projects vs the NYU Loan Balance I’ve Seen
There is a wide gap between the four-year cost of attendance estimated on NYU’s website and the balances I’ve seen in real life from their students.
Here is an estimate for the dental school:
|Estimated School |
Cost of Attendance
|Total 4 Year |
NYU Dental School Cost
Source: from NYU site as of 2018
What does this estimate leave out? For one, Grad Plus loans are a primary way that borrowers finance their education at NYU. These loans carry origination fees over 4%. Stafford origination loans carry origination fees around 1% but are capped at $40,500 a year. Since NYU dental students must borrow a lot more than that, they use expensive Grad Plus loans to cover the gap.
On NYU’s website, here’s what they list for yearly loan fees:
|Loan Fees |
Site as of 2018
|Year 1||Year 2||Year 3||Year 4|
If you’re borrowing ONLY Stafford loans, this estimate is way too low. If you add in the costly Grad Plus to the equation, I suspect the average NYU dental student pays $2,000 to $3,000 a year in loan origination fees. Why then does the school list a fraction of that? They make sure to protect themselves with the double asterisk: **Loan fees subject to change based on federal regulation.
Keep in mind the estimated cost of attendance I’m showing you is supposed to be for rising 1st-year students as of 2018. However, I mentioned that the debt loads of the class of 2015-2017 that I’ve seen have been about $550,000 for dental students.
That means when they went to school, the published cost of attendance was significantly less than what’s on the NYU website today.
Dentists have told me that their tuition increased while they were in school. If you look at NYU’s four-year cost of attendance estimate, you’ll only see the published prices at today’s rates. That gives an inaccurate picture for a student interested in their final loan balance at graduation.
Accrued Interest Growth Has a Big Impact
The worst impact though comes from the accrued interest growth while you’re in school. Unlike undergraduates, professional students receive few subsidies. The accrued interest balance once you finish can often be over $80,000 for dental students. This interest goes directly into your principal balance at graduation (called capitalization).
Hence, there are three ways the school’s cost of attendance estimate is flawed:
- Future tuition increases are not accounted for
- Accrued Interest isn’t mentioned
- Loan Fees are not accurate
Here’s how this might change your estimate of what you might leave school within debt. I’m including the med school cost as a comparison (before the school announced they were eliminating tuition).
How High Cost of Living Compounds the Problem
Let me focus on one aspect of the NYU student loan balances that is not the fault of the school: location.
New York City is extremely expensive. You’re virtually guaranteed to need the super high-cost Grad Plus loans to pay for living expenses there. In New York (or any expensive city for that matter), your rent could easily exceed $2,000 or even $3,000 a month.
Motivated students might try to live with roommates or avoid expensive food and entertainment options, but that only goes so far when your required tuition and fees costs $60,000 to $100,000 each year.
If you have other options, I always suggest to prospective applicants to choose a low-cost location for their graduate study. You’ll be working and studying most of the time anyway, so you might as well save $100,000 or more in living expenses that will result in a much lower debt burden.
Why Am I Picking on NYU Dental School?
There are plenty of offenders out there in the high balance student loan world. I have already written about St. George’s med and vet schools as well as Georgetown’s law school, so this is not the first time I’ve called out a university before.
I am picking on NYU Dental because I consistently hear so many horrifying stories coming from my clients and readers. It’s also one of the biggest dental schools by class size.
A cynical person might say I’m attacking NYU because I have a student loan consulting business. If I was smart, I’d keep my mouth shut and send a thank you note to NYU administration for producing so many new clients in need of our services. I’d rather folks have options when they graduate dental school that include not being at the mercy of government repayment plans.
In my view, the school seems to pair lots of poor information with a massive debt load. They are a virtual factory churning out dentists at a huge rate.
At other high-cost schools including USC, I have heard more stories of financial aid departments going out of their way to tell people about how they will likely need to use income-based repayment programs when they graduate.
Another example is Midwestern University. They list on their cost of attendance estimate that students should expect tuition increases of between 4% and 7% annually.
In contrast, I have heard SO many stories of NYU employees claiming fast repayment periods for half-million-dollar loan balances that I felt compelled to write this article.
What Can Be Done if You Already Have a Mountain of Dental School Debt from NYU (or any Expensive School)
While you might be able to put 50% of your take-home pay to your student loans, the first question I’d ask is if that’s a smart approach? If a loan forgiveness strategy shows a cost in today’s dollars of 60% of what you owe, then that would be the better path.
However, if your current family income today and in the future would warrant refinancing, you can get a plan for how and when to do that based on your career and family plans.
Maybe you want to start a family first, or buy a house, or purchase a private practice. Whatever your goals are, the student loans you have should bend to that objective.
We specialize in making student loans plans for dentists with over $100,000 in debt, and our average client owes somewhere around $280,000. Some have even owed over $1 million. Most have been NYU graduates. You can learn more about that service here if you’re curious.
You do not want to rock the boat if you’re in school currently. If you’re already past your first year, my suggestion is that you keep your head down, work hard, and increase your business acumen by engaging with this site and others like DentalTown, Physician on FIRE, Millennial Dentist, and Miss Bonnie MD, White Coat Investor, BenWhite.com, and more.
If you haven’t decided on where to go yet, my advice is DO NOT GO TO NYU unless it’s your only option for dental school, OR if you’re rich. Make certain that being a dentist is literally the only career path that could possibly make you happy. Otherwise, if you’re unsure, see if you can defer your acceptance and attempt to get into a lower cost program by reapplying.
Feel free to comment using a pseudonym or anonymous name in the comments section. I do not want to be responsible for any of you getting in trouble. Having hundreds of thousands in debt with no degree is much worse than graduating. Focus on that first.
Get to the point where you have $2 to $3 million in assets but $600,000 of student debt if you must go for forgiveness. If you’re making gobs of money, then get aggressive and pay the debt down quickly. .
The day of reckoning is coming for high-cost schools like NYU that relentlessly increase their tuition.
Eventually, the demand for seats at super expensive schools must go down. Supply and demand would dictate that at that point, tuition prices might finally fall. We are seeing this for law schools big time as enrollments fell drastically with the bad job market new JDs faced after the financial crisis.
While I think we are 10 years or more away from the bubble bursting for dentists, the current model is not sustainable. You cannot charge a half million for a degree to students whose main goal is to help patients and expect 22-year olds to continue to sign their lives away.
For now, the solution I have for folks interested in pursuing a dental school education at the ‘non-profit’ NYU is simple: “May the buyer beware.”
Already have student loan debt and need help coming up with a plan?