How to Pay Off Your Dental School Loans Faster

June 1, 2023

At a glance:

  • Deep in debt: Graduating with hundreds of thousands of dollars in student loans makes many dentists think owning a practice is out of reach.
  • A counterintuitive solution: Owning a practice helps dentists pay off student loans even faster, and banks are happy to extend loans to dentists with very favorable terms.
  • Your next big step: It isn’t an either/or situation—Aprio’s National Dental Practice can help you achieve your goal of owning your own practice and pay off your debt at the same time. Contact us today to get started.

The full story:

Dental school tuition, graduate degrees, specialty certifications, and other associated costs leave many future dentists buried in more than half a million dollars of debt by the time they graduate. That kind of financial burden can be overwhelming, and the upward trend in both tuition and interest mean that burden isn’t going to become more manageable anytime soon.

Many new dentists decide to take what they see as the safest option and become associates in existing practices. While it is true that taking an associate dentist position is the best option for new graduates—there aren’t many better ways to gain experience, improve clinical skills, and learn from mentors while drawing a steady base salary – it may not be the best choice in the long run.

Owning a dental practice is the fastest way to pay off student loans.

It probably sounds crazy, but taking on more debt might help you pay off your debt faster. How? A simple but counterintuitive idea: money makes money.

Most young dentists barely have the money to make their loan payments, let alone get the cash together to buy an existing practice outright. That means they’d have to take out another sizable loan to buy a practice, and the thought of taking on even more debt is probably more than a little scary to most dentists with outstanding student loan balances.

As scary as that might be, try to think about it like this:

  • Dentists who own their own practices make a lot more money than those who work in associate positions.
  • Dentists who make more money can afford to pay off all their debt even faster
  • Recent trends suggest that banks are highly willing to extend loans at very generous terms to dentists looking to buy their own practices.

Make a plan, then make a move.

New dentists can still view practice ownership as a viable goal as long as banks remain confident in the continuing profitability of practice ownership in spite of rising student loan balances.

Dentists who start planning early will find themselves in a much better position than those who leave it up to fate. Banks like to lend to dentists who understand the ins and outs of business ownership, and they’re much more likely to extend loans with friendly terms that cover 100% of purchase prices with extra working capital to those who start making strategic decisions as early as possible.

Running a business isn’t something most dental schools focus on, so partnering with a dental CPA is a great choice for anyone who wants to make sure their practice stays healthy and strong over the long run. Aprio’s National Dental Practice is ready and able to provide the kind of guidance and expertise you need to establish your business goals and grow your practice. 

Not ready to own just yet? Consider these other strategies for paying down student loans.

  1. Consolidate your loans – this tried-and-true method can help effectively lower interest rates and make it easier to juggle multiple loan balances. This isn’t usually an option for borrowers with very high balances, however, so keep this in option in mind for the future.
  2. Talk to your lender – the suggested minimum payment isn’t usually enough to cover your loan’s interest and pay down the principal. Talking to your lender can be an invaluable way to gain insight into different payment plans, including how much to pay per month to shorten the repayment period. Focus on your highest interest loans first.
  3. Explore income-driven repayment (IDR) – IDR options may provide a more flexible approach to paying off federal loans. These options can present solutions in the form of monthly repayment schedules that factor in income, family size, and other variables, as well as providing an avenue for loan forgiveness.

The bottom line

Managing debt can be a daunting task, but it shouldn’t get in the way of achieving your goals as a dentist. As strange as it may sound, taking on more debt and starting or buying a practice may be the right move if you want to pay off your loans faster.

If starting your own practice from beneath a mountain of debt sounds daunting, consider partnering with Aprio’s National Dental Practice and take the leap knowing you have a trusted advisor with deep industry experience to help you start and grow your practice. 

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About the Author

Caroline Galbraith

Caroline Galbraith is a director and wealth advisor for Aprio Wealth Management and Dental Wealth Management where she helps high-net-worth individuals, families, and executives and business owners implement sophisticated and personalized wealth strategies to achieve their goals. She specializes in estate planning, wealth transfers, tax management, risk analysis and investment strategy.