8 Strategies to Pay Off Dental School Debt

Kathryn Morstad
how to pay off dental school debt
how to pay off dental school debt

If you’re a dentist and graduated with 6-figure student loan debt, you are not alone in wondering how to pay off dental school debt. While only 17% of graduates from dental school graduated with no reported debt, the majority of dentists today are carrying a substantial student loan burden.

According to the American Dental Education Association (ADEA), those who graduated from public universities have an average of $261,226 in student loan debt, while those who attended private schools are carrying an even higher average of $354,900.

The good news is that dentists are excellent candidates for student loan refinancing and other forms of alternative payoffs due to their high income, according to the ADEA.

The not-so-good news is many dentists are carrying loans with interest rates as high as 10.5%. In addition to high loan fees, many in the dental industry are experiencing reduced income as insurance plans are negotiating lower and lower reimbursement rates for dental procedures. This reduced income eats directly into their ability to pay off student loans.

8 Strategies for Paying Off Dental School Student loans

Let’s look at eight strategies that can help you pay off dental school loans so you can focus on other financial goals, like saving for retirement, buying a new home, or saving for your child’s college.

Don’t Count on Federal Student Loan Forgiveness

First, a quick word about student loan forgiveness — you have probably been hearing about the possibility of the federal government agreeing to forgive student loans. When weighing that option, be sure to research what that means for people with advanced degrees or talk with a financial professional.

So far, it appears that any forgiveness will be focused on people with lower incomes or those who are financially disadvantaged in some way and have federal student loans. Private student loans do not qualify for forgiveness.

So, let’s look at how you can pay off those student loans.

1.   Pay More Than the Minimum

Paying more than the minimum amount due each month is a strategy that’s a win-win-win!

  • Win #1 — You are able to eliminate your debt faster.
  • Win #2 — Save money on interest charges over the life of the loan.
  • Win #3 — You can maintain or improve your credit score by reducing your outstanding debt.

You can do this successfully by adding an additional amount on each monthly payment. Or, if you’re paid bi-weekly, schedule half of each month’s payment from every paycheck. At the end of the year, you’ll have a full payment to dedicate towards principal only.

Just be sure your loan servicer doesn’t have pre-payment penalties before paying more than your minimum payment.

2.   Use All Additional Windfalls to Make a Difference

If you receive additional money through the year, pay the extra cash directly towards your student loans. Windfalls can include:

  • Sign-on or year-end bonuses
  • Tax refunds
  • Lump sum payments or proceeds from the sale of property
  • Inheritances or winnings

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1.   Earn Additional Income Working as a Locum Tenens

Often when people look at how to pay off dental school debt, they will look at taking on additional work.

Without a doubt, Locum Tenens (or temporary, fill-in) work can pay extremely well. Temporary part-time and full-time positions are available to cover vacations, unfilled hours, or staff shortages. And that income can be used to pay down student loans.

It can also be a great way to travel and experience different communities before settling in a single spot.

2.   Consider State Loan Forgiveness Programs

Beyond scholarship programs, most states have loan forgiveness or repayment programs that are awarded to dentists and other healthcare professionals. Options include practicing in underserved locations, such as designated Health Professional Shortage Areas (HPSAs), or working with at-risk populations.

Each state’s programs are administered by their state authority, so it may require some investigation to secure the right option. These programs can cover both federal and private student loans and can commonly include annual lump sum payments in the range of $20,000 to $35,000.

The only caveat to student loan forgiveness: in many situations, the loan amount that’s forgiven is subject to taxation as regular income. Be sure to check with your financial advisor before agreeing to participate.

3.   Apply for the Federal PSLF Program

As someone with a dental degree, you are eligible to apply for the federal Public Service Loan Forgiveness Program (PSLF). It’s available to healthcare professionals with federal student loans who work full-time in a qualifying practice or clinic.

With PSLF participation, you make 120 consecutive payments (10 years) and then you’re eligible for loan forgiveness on the remaining balance. The balance is not subject to income tax.

4.   Income-Driven Repayment Plans

The federal Income-Driven Repayment Plans (IDR) may be a long shot for dentists since participation is based on financial need. But if you feel your monthly payments are too high, then IDR may be worth exploring.

There are four plans available, including:

·         Income-Based Repayment (IBR)

·         Income-Contingent Repayment (ICR)

·         Pay As You Earn (PAYE)

·         Revised Pay As You Earn (RePAYE)

These plans structure your loan repayment term to 20 or 25 years, and the payment is based on a percentage of your discretionary income.

5.   Direct Consolidation

The federal Direct Consolidation program allows you to bundle all your federal loans into a single loan package and extend the repayment term up to 30 years.

With this option, you aren’t getting a lower interest rate since the new loan will have an average interest rate based on all of the loans consolidated. However, some borrowers choose this option to simplify their payments and extend their loan term for a lower monthly payment.

6.   Refinance Your Student Loans

There are still great interest rates available when refinancing student loans. Rising interest rates and inflation are all over the news, but many private refinance lenders still offer rates that allow you to save money.

For example, if the average interest rate on your combined student loans is 10.5% on a total of $250,000 to be paid over 10 years, your monthly payment is about $3,373, plus you will be paying over $154K in interest.

If you refinance that same amount to a fixed rate of 4.1%, your monthly payment will change to $2,543 and you will pay only $55K in total interest. By continuing to pay the original amount (about $800 more each month), you would pay your loan off almost 3 years faster. 

See How Much You Can Save

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When Refinancing, How Do You Find the Best Lender?

If you are considering refinancing to pay off dental school debt, it’s important to evaluate different lenders to compare their interest rates, terms, and special offers or programs. Fortunately, you can do that by visiting a marketplace site like Purefy to compare offers from top-tier lenders.

When using a student loan refinancing marketplace, you have the opportunity to get pre-approved offers from a variety of lenders in minutes. You can check rates with no affect on your credit score and no obligation to proceed until you are ready.

Getting a Quote

To get student loan refinancing offers, you’ll enter some personal information, such as:

  • Your name, address, contact information, and Social Security number
  • Your income (be sure to include paychecks or practice income you pay yourself),
  • School attended and highest degree earned (DDS vs. DMD)
  • Your total loan amount
  • Whether you are a U.S. citizen or permanent resident

After submitting the form, you’ll receive a comparison of interest rates and terms from up to four different lenders. The rate comparison tool will allow you to sort the list to determine the best option for paying off dental school debt.

Applying for a Refinanced Loan

Once you have selected the best lender for your circumstances, you can apply and submit the required documents (like paystubs, tax returns, and payoff statements for your current loans).

There are no application or origination fees and no pre-payment penalties with any of Purefy’s lenders. Once you’re approved, your new lender will pay off your existing loans and create one new loan at the rate and term you choose.

To Summarize

There are a variety of ways to pay off student loans, such as making additional payments or by trading services for loan forgiveness (as with PSLF).

One thing is for certain: it’s a good idea to compare your current interest rates with what’s available — you could save money and pay off your loans sooner.

Compare rates with Purefy today to see if you can start saving money on your dental school student loans.

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Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 01/01/2023. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

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Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

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Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.72% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 4.39% APR to 9.19% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

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Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 6.94% to 11.58% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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