How to Pay Off Your Dental School Loans Faster

September 15, 2021

At a glance:

  • Drowning in debt: Most dentists graduate with hundreds of thousands of dollars in debt and assume owning a practice is out of reach.
  • A different perspective: In reality, owning a practice can help dentists pay off debt even faster, and banks are ready to lend to most dentists with generous loan terms.
  • Take the leap: If you’re ready to pay off your student loans faster and achieve your goal of owning a practice, Aprio’s National Dental Practice can help make that dream a reality. Contact us today to get started.

The full story:

It’s not cheap to become a dentist. With tuition steadily on the rise, many dental school graduates enter the workforce with $400,000 or more in student loans – that’s nearly half a million dollars of debt and doesn’t even include the costs of graduate degrees or specialty certificates.

That kind of financial burden can be overwhelming to a recent graduate. Feeling the pressure of mounting interest rates, many new dentists opt for long-term employment at an established practice – but is that truly the best way to pay off a student loan balance? Not always.

The obvious path to paying off student loans faster is to make more money, and it’s logical to assume the fastest way to make more money is to take an associate dentist position with a steady base salary. While this is true for the short term, it is not in the long term.

The fastest way to pay off student loans is to own a dental practice.

I know it probably sounds crazy – how could taking on more debt help you pay off debt faster? The answer is simple: dentists who own their own practice make more money. That means more money to pay down debt.

Before I go any further, let me clarify: associate dentist positions are still the best choice right out of college. It allows new dentists to gain practical experience, improve clinical skills, and develop mentoring relationships. It also provides an opportunity to gain some financial stability.

Each of these benefits also makes it easier to reach the next goal of becoming a practice owner. A good credit score and a little experience can make any dentist a prime loan candidate in the banks’ eyes. Recent trends show that banks view dental practices as a strong investment, with many providing generous lending options, including loans that cover 100% of purchase prices with extra working capital.

Moving from associate to owner will require thorough planning.

If the banks are confident that practice ownership is still profitable despite rising student loans balances, then new dentists can still view practice ownership as a viable goal as long as they start planning early. A large student loan balance may not make it easy to save money, but some strategic financial decisions can help you prepare for the future. After all, owning a practice means owning a business, and those aren’t necessarily skills they teach in dental school.

One way to ensure a stronger, healthier practice (when the time is right) is to partner with a dental CPA. Aprio’s National Dental Practice can lend the expertise you need to establish your business goals and grow your practice.

Not ready to jump into ownership? Consider these three other strategies for paying down student loans.

  1. Consolidate your loans – this is a tried-and-true option for effectively lowing interest rates when juggling multiple loan balances. It’s not usually an option for very high balances, though, so consider this option in the future.
  2. Talk to your lender – usually, the suggested minimum payment isn’t nearly enough to cover the interest and effectively pay down the principal. Talking to the lender can provide quick and easy insights into different payment plans, including how much to pay per month to shorten the repayment period. Focus on the highest interest loans first.
  3. Explore income-driven repayment (IDR) – for federal loans, IDR options can provide a more flexible approach to paying off loans in the form of a monthly repayment schedule that factors in income, family size, and other variables and provide an avenue for loan forgiveness.

The bottom line

Managing student loan debt can be daunting, but don’t let it stop you from pursuing your career goals as a dentist. In some ways, starting a practice is exactly the right move to make if you want to pay off those loans faster.

However, starting your own practice might feel even more daunting than that mountain of debt. Partner with Aprio’s National Dental Practice and take the leap knowing you have a trusted advisor with deep industry experience to help start and grow your practice.

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About the Author

Brad McKeiver

As partner-in-charge of Aprio’s National Dental Industry Practice, Brad McKeiver arms dentists with real-time financial data about their practices. He has helped numerous dental practitioners make informed business decisions that focus on driving increased practice profitability, growth and value.