Janice Lozano
With the average dental student carrying over $300,000 in loans, many dentists face the challenge of balancing repayment while kickstarting their careers. The best way to pay off dental school loans depends on one's career path, and refinancing, income-driven repayment, and forgiveness are all options. Refinancing can lower interest rates and save money, but it is not always the best option as it makes more sense to go for loan forgiveness if your debt vastly outpaces your income. Federal loan forgiveness programs, such as Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE), can be a lifeline for dentists with substantial student debt.
| Characteristics | Values |
|---|---|
| Average student debt | $300,000 to $400,000 |
| Average salary | $40,000 to $130,000 |
| Repayment plans | PAYE, REPAYE, income-driven, standard repayment plan |
| Loan forgiveness programs | PSLF, PAYE, REPAYE |
| Refinancing options | SoFi, Laurel Road, American Dental Association (ADA) and Laurel Road partnership |
| Tips | Avoid locations saturated with dentists, avoid costly mistakes, save and be frugal, consolidate loans, choose flexible terms, keep meticulous records, consider locum tenens work |
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What You'll Learn
Refinancing to lower interest rates
Refinancing is one of the most effective ways to reduce the financial burden of dental school. By consolidating your loans and securing a lower interest rate, you may save thousands of dollars over the life of your loan.
When examining your dental school debt, you’ll generally encounter two types of loans: private and federal. Understanding the differences between these loan types is crucial because they affect your options for consolidation or refinancing. Consolidation is only available for federal student loans. When you consolidate, all your federal loans merge into one Direct Consolidation Loan. Your new interest rate is a weighted average of the rates from the consolidated loans.
You can refinance federal and private loans. It involves taking out a new loan to pay off one or more of your dental school loans, ideally with better terms—for example, a lower interest rate. Private lenders will refinance any sort of student loan, including federal loans. While their terms for the length of a loan might not be as long, the interest rates are likely to be lower, saving you money.
Refinancing can lower your interest rate, which may save you money and help you pay off dental school loans faster. For example, refinancing $304,824—the average dental school debt for the class of 2020—from 7% interest to 5% would save you roughly $306 per month and more than $36,736 over a decade, assuming you had 10 years of payments remaining and kept the same repayment schedule.
Many refinancing plans allow you to choose repayment terms based on your income and goals, offering flexibility to suit your needs. For instance, the American Dental Association (ADA) partners with Laurel Road to provide dentists with refinancing options that often exclude application or origination fees.
If you refinance federal loans, you lose access to federal loan benefits, including flexible repayment and forgiveness options. So, if you plan to pursue Public Service Loan Forgiveness, refinancing may not be the best option. Experts suggest refinancing if your total debt is less than 1.5 times your income. If it exceeds this threshold, forgiveness programs may be a better option.
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Federal loan forgiveness programs
The Public Service Loan Forgiveness (PSLF) program is a federal program that forgives borrowers' remaining student loan balances after they make 120 on-time payments under a qualifying income-driven repayment plan. This program is available to dentists and dental hygienists who work for a qualifying employer, typically in underserved communities. PSLF provides an opportunity to make a meaningful impact by working in community health centers, rural clinics, or nonprofit organizations.
The National Health Service Corps (NHSC) Students to Service Loan Repayment Program offers up to $120,000 in tax-free student loan repayment for students in their last year of dental school pursuing a Doctor of Dental Surgery or Doctor of Medicine in Dentistry degree. Participants must agree to work full-time for at least three years in a Health Professional Shortage Area.
Additionally, there are state-specific loan forgiveness programs offered in states like New York, Indiana, Massachusetts, Alaska, Iowa, and Missouri. These programs provide loan repayment assistance for dentists and dental hygienists working in underserved areas, health professional shortage areas, or public or nonprofit settings.
It is important to note that refinancing federal student loans may result in losing access to income-driven repayment plans and loan forgiveness programs. Therefore, it is crucial to carefully consider your career path and repayment options before deciding on a loan forgiveness program.
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Locum tenens dentistry
Paying off dental school debt can be a daunting task, but with strategic approaches, it is achievable. One option to accelerate debt repayment while exploring new practice opportunities is locum tenens dentistry.
Locum tenens dentists fill in for regular dentists during their absence, providing temporary dental services. These assignments offer flexibility, allowing dentists to work in various locations and gain diverse experiences. They often come with competitive pay and additional perks, such as choosing shifts that fit your availability and exploring different healthcare settings.
For example, AMN Healthcare offers locum tenens dentistry jobs with salaries up to $2.1 million annually. These positions provide competitive hourly rates or daily rates, depending on the facility and location. Locum tenens opportunities can be short-term or long-term, with flexible scheduling and the latest dental technology.
A full-time dentist taking on part-time locum tenens work can allocate the additional income directly towards loan repayment, reducing the principal balance faster and minimizing interest accrued. This approach can shorten the repayment period, making it an effective strategy to manage dental school debt.
In conclusion, locum tenens dentistry provides a rewarding and flexible way to supplement income while gaining valuable experience in different practice settings. It offers competitive pay and benefits, making it a viable option for dentists seeking to accelerate debt repayment and explore new career opportunities.
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Income-driven repayment plans
The SAVE repayment plan, offered by the American Dental Association (ADA), is a prominent example of an income-driven option. SAVE allows dentists to adjust or pause payments when their income decreases or they become unemployed. This flexibility is advantageous for new dentists establishing their practices, working part-time, or taking extended leave. While SAVE offers forgiveness after 25 years, borrowers may aim to repay their loans sooner to minimize interest accumulation.
Federal loan forgiveness programs, such as Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE), also provide income-driven repayment plans. These programs tie payments to a percentage of discretionary income and forgive remaining balances after a set period. Additionally, the Public Service Loan Forgiveness (PSLF) program combines income-driven repayment with loan forgiveness for those employed by government or non-profit organizations. PSLF offers debt relief and the opportunity to serve underserved communities.
When considering income-driven repayment plans, it's essential to weigh the benefits against potential drawbacks. While these plans provide short-term relief by lowering monthly payments, the extended repayment period results in accumulating interest, potentially increasing the overall cost. Additionally, forgiven amounts under income-driven plans may be taxed, impacting long-term financial planning. Therefore, it's crucial to carefully evaluate income-driven repayment plans alongside other strategies, such as refinancing and loan forgiveness programs, to develop a comprehensive debt management approach.
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PSLF program
The Public Service Loan Forgiveness (PSLF) program is a federal initiative that offers financial relief to dentists employed by qualifying entities. This program is specifically designed for those working in the public sector or underserved areas, such as community health centers, rural clinics, or nonprofit organizations. PSLF provides reduced monthly payments and forgiveness on the remaining balance after making 120 qualifying payments while working full-time for a qualifying employer. To qualify for PSLF, individuals must have Direct Loans or consolidate other federal student loans into a Direct Loan and repay the loans under an income-driven repayment plan.
The PSLF program is beneficial for dentists who wish to serve underserved communities while effectively managing their student debt. It provides an opportunity for dentists to make a meaningful impact in these communities. To ensure they remain on track for forgiveness, it is essential to keep meticulous records and regularly certify employment.
Additionally, dentists can explore locum tenens opportunities, which offer temporary assignments with competitive pay and perks. These assignments can help accelerate debt repayment and provide valuable experience for those considering establishing their own practice.
The American Dental Association (ADA) also offers resources for dentists seeking loan forgiveness. ADA members can schedule free consultations with student loan specialists to analyze their loan history, review repayment and forgiveness options, and create personalized financial plans.
Furthermore, state and federal dental school debt forgiveness programs are available, such as the NHSC Loan Repayment Program, which provides up to $55,000 for full-time participants and up to $30,000 for half-time participants in non-primary care disciplines, including dentistry. These programs typically require working in the public sector or underserved areas to qualify for debt forgiveness.
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Frequently asked questions
The best way to pay off dental school loans depends on your career path. Refinancing, income-driven repayment, and forgiveness are options for dentists. Refinancing can lower your interest rate, which may save you money and help you pay off your loans faster. Federal loan forgiveness programs, such as Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE), can be a lifeline for dentists with substantial student debt. These income-driven repayment plans tie your payments to a percentage of your discretionary income and forgive any remaining balance after a set repayment period.
Refinancing can be done if your total debt is less than 1.5 times your income. It can significantly lower the interest you pay, especially if you currently have high-interest federal or private loans. You can consolidate your existing loans into a direct loan with a lower interest rate, which may save you thousands of dollars over the life of your loan.
For dentists considering PSLF, this program is especially beneficial for those interested in serving underserved communities while managing their student debt effectively. Locum tenens work can accelerate debt repayment while providing unique career opportunities. A full-time dentist who takes on part-time locum tenens assignments can allocate the additional income directly toward loan repayment, reducing the principal balance faster and minimizing interest accrued.
