According to a recent survey published by ADEA, the average graduating dental student has around $287,000 in student debt.  However, the same data shows that more than 30% of graduating dentists have over $300,000 of debt.  16% of graduates said they had not debt (what they do likely have are rich and generous parents) which skews the overall numbers downward compared to the average among those who do have debt.  Among those who do have educational debt, the average for the last few years is right around $300,000.  If you need to take out loans to cover the cost of your dental education, then you should plan on having at least $300,000 in debt.  Of course this number is increasing each year, and at a concerning rate.  If you have parents or a rich uncle who are willing to foot the bill for your entire dental education then you can skip this article and go back to studying for the DAT.  For the rest of those who intend to pursue dentistry as a career and who will be financing that education through student loans, this article is for you.

What are the actual costs of dental education?

Not only are there obvious costs such as dental school tuition, but during dental school there are many other fees, living expenses, loan interest costs as well as opportunity costs that have to be acknowledged. When choosing a dental school, don’t just look at tuition.  You need to look at the total cost of attendance over the four years you will be there.  Even tuition is a moving target as it may not be locked in for the duration of your time in dental school.  It’s likely you will end up paying 4% or so more each year compared to what is listed on the school’s web site.  The school web site generally shows current tuition levels, not an exact projection of what costs will be for you.  It’s more expensive to go to school in a high cost of living area compared to a low cost of living area.  Some schools might offer scholarships.  If you have a spouse then maybe one location offers a better job opportunity than another.  All of these details need to be considered.  So step one is to compute the TOTAL cost of attendance.

Besides the actual dollar amounts required to pay for four years of dental school, there are opportunity costs to consider.  If you like the idea of being a dentist, then you probably considered alternative careers as well such as being a physician, physician assistant or other healthcare professional.  You may have had other interests such as business or finance.  If dentistry is the only career you can ever picture yourself in, then this exercise is moot.  However, if you might consider being a physician, for example, then you should consider what that career has to offer and compare it to what dentistry will provide.  If you got into dental school then its highly likely you could have gained acceptance into an MD or DO program as well.

Earnings as a dentist

How much does an average dentist earn?  It’s really difficult to say, but the ADA compensation report for 2016 data shows average income for a general dentist to be $188,580 and $333,540 for dental specialists.  For recent graduates, the median income was $130,000 and half earned between $96,000 and $175,000 annually.  Oral surgeons and their $518,520 per year average stand out as outliers compared to the rest of dentistry.

The alternate career paths I mentioned earlier might offer similar or perhaps even greater compensation.  In the case of PA school, the training is also significantly shorter.  PAs earn an average of around $110,000 to $120,000 (depending on who you ask).  PAs in certain fields such as dermatology or surgery can earn $130,000 to $150,000 or more.

Starting salaries for physicians are generally higher across the board compared to dentists.  For example, family medicine physicians start out at around $200,000 while radiologists, anesthesiologists and surgeons start out earning $300,000 to $400,000.  Experienced physicians can earn significantly more.

When a dentist graduates from dental school there is yet another hurdle to achieve the greatest level of success:  owning a practice.  Becoming an owner means another potentially huge debt obligation–possibly greater than all of your student loan debt combined.  Alternatively, you can plan to work as an associate or employee dentist indefinitely, but you are likely capping your potential earnings relative to what you could do as an owner.

What might your personal finances look like with a large student debt?

There are many out there who have done the calculations to figure out the exact cost–including both actual costs in terms of tuition, fees, living expenses etc, but also opportunity costs.  I think starting out it’s most helpful to get a baseline feel for what this might look like using some basic parameters.  There are debt repayment programs including things like PAYE/REPAYE/IBR etc.  That’s another topic for another day.

To keep it simple, let’s suppose you graduate with 500k of student debt.  You get a job as a general dentist associate earning $120,000.  If you were able to consolidate this debt at 6% and you were to pay it back over a period of ten years then your monthly debt payments would be $5,551.  Using a good tax estimator, your 120k income would yield an after-tax monthly income of about $7,200.  There is of course variation depending on your marital status, home ownership status, charitable contributions, state tax rates etc.  Still, this is a good rough estimate which basically subtracts federal income tax, payroll taxes and I subtracted a little for state income tax.

As you can see, 7,200 minus 5,551 equals 1,649 dollars.  All you have to do is pay your rent, food, transportation, phone and all your other living expenses out of this amount.  The picture looks very grim indeed for someone with 500k in debt and a job that pays $120,000.

If you extend the payments over 20 years, then the monthly debt payment would be about $3,600 per month.  That’s still half of your monthly income, and your total payments over that period of time would add up to 860k!  If you kept your debt to 300k then your monthly payments would be $3,331.  If you extended that out to 20 years then you would be at $2,150.  However, extending the payments means you would end up paying 515k in principal and interest.

At 250k of debt with a 10 year term with a 6% interest rate the monthly payment would be about $2,800 per month.  That seems doable, especially if you can grow your income over that period of time.

Speaking of growing your income…practice ownership is the way to most effectively achieve this goal over time.  But do you think a bank would want to loan money to a dentist who has 500k of debt already and who has monthly debt payments that already eat up half of his/her monthly earnings?  This is of course the catch-22 situation facing many new graduates.  In order to grow their income so they can repay their loans they need to become an owner.  However, their debt may prevent them from becoming a practice owner.

So, what is the answer?

I think based on my conversations with dentists and doing some basic calculations that if you can keep your debt to less than about 300k then you can make it.  It might not be easy, but it’s doable.  Your income should hopefully increase from 120k to closer to 200k over the first ten years of practice.

On the other hand, if you have greater than 300k of student debt as you graduate from dental school then I believe you need to have a really well thought out plan and strategy to repay the loan and increase your earnings.  Is a DDS/DMD generally worth a 500k price tag?  I honestly think the answer is “no.”  Of course there are exceptions.  A successful OMFS can pay back that 500k and still do fine.  But can a general dentist who is stuck in associate or employee type jobs making less than 200k make it?  Not without some serious discomfort.  In that case I think from a financial perspective that dentist would likely have been better off making a different career choice.

What do you think?  We all know debt is a problem in dentistry.  How has it affected you or people you know?  Is a DDS/DMD worth 500k?  How about at the current average cost of $300,000?  At what cutoff in terms of debt is dentistry no longer a wise choice?

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