If you’re not sure what a periodontist is, it’s a dental specialty. They work mainly on cases of severe or complex gum and bone disease as well as challenging implants. Dentists can refer periodontists for tough cases that go beyond the expertise of general dentistry.
Since they’re specialists, periodontists require extra training and can typically earn more money than a general dentist, but they graduate with the same amount of student loans.
To figure out if it’s worth taking out the debt to become a periodontist, we’re going to look at income potential, the cost of getting the degree and other key factors that affect loan repayment plans.
I’ll also run you through some case studies on how to pay back dental school debt during periodontal residencies.
Let’s dive in!
Periodontist requirements can impact student loan repayment
Periodontists go to dental school just like general dentists. But periodontists go through 3 years of residency after graduating, as opposed to a general dentist who can start practicing right after graduating dental school.
Those three years give periodontists the extra skills they need to deal with more complicated gum, bone and teeth issues.
Obviously resident salaries are a fraction of what is earned after becoming full-fledged periodontists. This can put a wrinkle in student loan repayment strategies. Therefore, the short term repayment strategy while in residency may be different than the optimal long term strategy for periodontists.
I’ll cover that in a little bit.
Periodontist student loan debt — how much do people have?
Dental school is one of the most expensive grad-level programs out there and dentists graduate with more debt than most other professions.
A typical dentist will graduate with around $250,000 to $300,000 in student loans and those attending private schools can add about 50% more to that total. We’ve done 468 consults for dentists with an average debt of $381,000. That’s among the highest average we’ve consulted with compared to other professions.
However, dental schools continue to be in high demand because of the high-income potential for dentists and specialists like periodontists. Plus, periodontists an even higher income potential if they decide to open their own practice.
That being said, general dentists may overestimate their income. Many get paid well below their average expected salary. However, putting in the extra training during a periodontal residency leads to a higher income.
What is the average periodontist salary?
Periodontists get paid a nice premium compared to general dentists.
According to ZipRecruiter, the average dentist makes $162,000 per year. The same source shows that the average periodontist makes $248,000. That’s a 50% premium on an already high general dentist salary.
The number of periodontists in the city or town where they practice also impacts income. We’ve found that periodontists who practice in more densely populated areas, like New York and Los Angeles, tend to make less money because of more competitive markets. Those who set up in rural areas tend to make more because they can be the only game in town. Less competition means more business, which leads to a higher income.
Practice ownership also plays a role. Rarely have we worked with a practice-owning Doctor of Dental Surgery (DDS) or Doctor of Medicine in Dentistry (DMD) earning less than $300,000. Profit margins from owning practices are higher than an associate’s payout, so a practice-owning periodontist makes more money even if they have the same education as their non-practice owning colleague.
If you want to hear more about what practice ownership entails, listen to this great podcast interview Travis had with Zachary Kingsberg, a practice-owning dentist. Though he’s a general dentist, it gives a good sense of what things could look like for periodontists.
The best two loan repayment strategies for periodontists
In our experience, periodontists have two solid options that will save the most money paying back their student loans:
- Pay off the loans aggressively with a goal of being debt free in 10 years or less. This could involve refinancing student loans to lower interest rates, as long as they could afford the payment.
- Sign up for an income-driven repayment (IDR) plan, like Pay As You Earn (PAYE) or Revised Pay As You Earn (REPAYE), that adjusts payments based on your income for 20-25 years. After that, loans are forgiven and taxes are owed on the forgiven balance.
With the first option, a periodontist should throw every extra dollar they can find at their debt to become debt free as quickly as possible. The second option is the exact opposite, pick an income-driven repayment plan that will keep payments as low as possible, max out pre-tax retirement accounts to lower adjusted gross income (AGI), save up for the tax bomb and maximize forgiveness.
Going with an in-between repayment strategy like (1) paying more while on income-driven repayment or (2) going beyond 10 years to pay back the debt after refinancing could be a needless waste of thousands of dollars. We’d rather periodontists keep that money in their pockets!
Which option is best? It depends on specific situations. There could also be a slightly different strategy while in residency.
I’ll walk you through some scenarios.
When periodontists should refinance student loans
Julia has $350,000 at 6.8% in student debt and makes $250,000 as a periodontist. Her income is projected to grow slow and steady at 3% per year. Should she take the aggressive approach or go on income-driven repayment?
Let’s take a look at the numbers comparing PAYE, a standard 10-year plan and refinancing:
This is a clear refinancing case because it will save Julia the most money by far when compared to the other two options.
PAYE would cost about $240,000 more to pay back her student debt and double the amount of time until she’s student debt free (20 years versus 10 years). The refi payments are $1,700 higher per month versus her initial PAYE payment, but she can easily afford that on a $250,000 income. It’s worth it due to the long-term savings.
Refinancing is much better than the standard 10-year plan because of interest savings. Both get her debt free in 10 years, but lowering her interest rate from 6.8% down to 4.5% will reduce the total cost of paying back her debt by nearly $50,000 and lower her monthly payment by about $401 per month!
When periodontists should look at income-driven repayment
Andy is a periodontist who lives in Southern California. His salary is $200,000, and he owes $450,000 in student debt from undergrad and dental school. He’s not planning to open his own practice so his income should grow at the normal 3% per year.
Although it looks like refinancing provides the lower cost, it isn’t actually the most affordable option because the combination of his high payment and lower salary doesn’t leave much room for other financial goals.
Let’s say his take-home pay is about $10,000 per month. Nearly half would go toward his refi payments over the next 10 years. This leaves him with just over $5,000 for regular monthly outflows while living in expensive SoCal.
On PAYE, his payment would start at $1,515 which would leave him with about $8,500 per month in take-home pay. He could save about $3,000 a month by maxing out his pre-tax retirement plan, saving for the tax bomb ($614/month) by doing a backdoor Roth IRA contribution and reaching other financial milestones along the way.
Assuming his $3,000 per month would be invested and grow at 5% per year, he’d build up a $465,000 nest egg in 10 years. That would continue growing to $1,004,000 in 20 years, even after paying the tax bomb. That doesn’t take into consideration that he could also increase the amount going to savings as his income grows.
Now, let’s say he were to refinance, throwing all he can toward his loans and holding off on savings for 10 years. He’d be debt free in 10 years. He could then take the $4,664 payment and invest it for the next 10 years (years 11-20) and end up with $724,000. That isn’t bad but it ends up being about $280,000 shy of the PAYE plan which invests the difference in payment. Andy would have a 38% higher net worth after 20 years by being on the PAYE plan ($1,004,000 with PAYE versus $724,000 refinancing)!
Periodontists can save money on their student loans in residency
Let’s go back to Julia. Remember that she has $350,000 in student loans at 6.8%. Now, let’s assume that this is what she graduated with before entering her three-year residency.
Julia will earn $50,000 for three years as a resident, then she jumps to $250,000 after those three years.
Refinancing is still the long term play for her, but a $3,600 per month payment while earning $50,000 is an absolute no-go. That would pretty much be all of her take-home pay, if not more. Putting her loans in forbearance isn’t a good strategy either because the interest will skyrocket over those two years.
There is a way to keep the loan from growing fast even without making payments that actually cover all the interest.
Enter the REPAYE interest subsidy:
The normal interest charge on Julia’s loans would be $23,800 per year ($350,000 x 6.8%) no matter if she’s on PAYE or IBR. But REPAYE is different. The government will wipe away half of whatever interest isn’t covered by her monthly payment.
For example, let’s say Julia waives the grace period and starts on REPAYE between graduating from dental school and starting her periodontal residency. Her payments on REPAYE could actually be $0 per month for the first year of residency. The interest subsidy will put her in a better position versus going into forbearance with a $0 payment.
Since her $0 payments don’t cover any interest, the REPAYE interest subsidy wipes away half of the $23,800 interest charge. On PAYE, IBR, or if her payment was in forbearance, her loan would accrue $23,800 in interest with $0 monthly payments. But on REPAYE, the accrued interest grows by $11,900, which is half of the amount.
Using her tax returns as proof of income will also make things more affordable in residency. Her tax return for the year she starts her residency will show only $25,000, for half a year of residency salary, so her payments would be about $52 per month. From there, she’d get an $11,600 subsidy.
After three years of this strategy, Julia’s payments would be a total of about $1,500 and the government would have paid $35,000 in interest which works out to about $1,000 per month! After finishing up residency, her salary would be high enough that she can refinance her dental school loans and pay them back in 10 years or less.
Going on REPAYE would save her more than $35,000 in interest and even more when paying back her refinanced loans. REPAYE first, followed by refi, is a huge savings!
Is it worth it to become a periodontist?
The answer is an emphatic yes! Ideally, minimizing student loans is the way to go, but that’s not always an option.
It’s scary to think about taking out $300,000 to $400,000 of student loans, but there’s an optimal plan to pay it back — whether you’re in Julia’s situation (refinancing) or in Andy’s situation (using the PAYE plan with aggressive savings on the side).
Though things will be tight during residency, the average salary for a periodontist is $80,000 more per year than general dentists. That means it takes less than three years to recoup the salary lost during those two years of residency. It’s all gravy after that.
Becoming a practice owner can make this even more compelling per the podcast episode I mentioned earlier.
Periodontists can have a solid student loan plan
Periodontists can find a clear path to pay back their student loans. A path that can not only save them significantly more during repayment but give them actions steps and a clear path to get it done.
Student Loan Planner has done almost 3,000 student loan consults for clients totaling over $750,000,000 of student loan debt. We can help you figure out the optimal path in just one hour. Plus we also include email support after the consult where we continue to answer questions and help you implement your plan. Learn more about our consult process here.
If your case is a pretty clear cut refinancing example with no practice ownership in the imminent future (perhaps because the refi payment could get in the way of the practice loan), there’s no need to get a consult. But I’d suggest applying through our cash back refinancing links to see if you can cut your interest rate and get the most affordable terms for your situation.
I work with borrowers who owe more than $400,000 in student loans which often includes periodontists, so feel free to email me at [email protected] if you have any questions about this post.
Our team can help anyone, so feel free to choose the right consultant for you based on your individual circumstances.
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