DEALING WITH DEBT:

OUR BEST ADVICE
The best advice I was given in dental school?  "Live like a dental student while in school, not a dentist."  Makes sense, but it is easy to get in deep.  Sure you are going to be making good money when you graduate, but you have to consider all of the other expenses you will have as well.  With student loan payments of $1,000+ there may not be much left over for the rent, car payments, food... It is easier said than done, but borrow only what you need to get by.  This may mean that you will not be able to go out every night or go to the mall on the weekends.  In the long run you will be better off, with loan payments a few hundred dollars less than you may have had.  Keen financial planning should begin in dental school.

CREDIT
The more you borrow today, the more your future earnings will need to be to repay the loan.  Carefully constructing a school budget annually will help to minimize this.  And watch those credit cards.  Most students have established credit in some manner before entering dental school.  Many will receive numerous credit card applications in the mail, and they will be enticing you with great deals.  The best thing to do is to have one or two major credit cards and keep up on the payments.  If you have trouble making these payments, or miss several payments, your credit history can be reported and this will become a factor when seeking credit in the future.  

Depending on the company or type of loan that you have, missed payments will be reported to a credit bureau and this will show up on your credit history.  Most credit agencies keep these records for a period of seven years.  Financial trouble while in dental school could prevent you from securing credit after graduation, for purchasing a car, a home, or even a dental practice.

On occasion there are errors to credit reports, so you may want to check to make certain that your report is accurate.  The process to correct errors on your credit report can take several months to correct.  You can obtain a copy of your credit report by sending a written request to one of the credit reporting agencies.  Below are two of the more widely used agencies:

CSC Credit Services Consumer Assistance Center PO Box 674402 Houston, TX 77267-4402 (800) 231-6783

TRW Consumer Assistance Center PO Box 2350 Chatsworth, CA 91313-2350 (800) 682-7654

KEEP GOOD RECORDS
Most loans taken out in dental school are long term loans with terms of up to 10 years. This is no small obligation, obviously, and you should keep everything you receive from lending institutions.  Although much of this information is legal mumbo-jumbo, it contains the information necessary to properly manage the loans you are expected to repay.  You have heard the phrase "Don't sign something you haven't read", another good piece of advice.  Just as you keep a notebook for each class, it is a good idea to keep a notebook of these papers.  While you may not look at these things that often, you will need them eventually, believe it or not.  Records you should keep include copies of:

  Loan applications
  Promissory notes
  Loan disclosure statements
  Correspondence from lenders

INTEREST RATES AND MONTHLY PAYMENTS
Below we have included a monthly payment schedule per $1000.00 of student loans. This should give you a general idea of what you might expect to pay per month when that time comes around. For a more precise estimation, go to the loan calculator.


Interest Rate

	6%	8%	10%	12%	14%	16%
5 years	19.33	20.28	21.25	22.24	23.27	24.32
6 years	16.57	17.53	18.53	19.55	20.61	21.69
7 years	14.61	15.59	16.60	17.65	18.74	21.69
8 years	13.14	14.14	15.17	16.25	17.37	18.53
9 years	12.01	13.02	14.08	15.18	16.33	17.53
10 years	11.10	12.13	13.22	14.35	15.53	16.75
12 years	9.76	10.82	11.95	13.13	14.37	15.66
15 years	8.44	9.56	10.75	12.00	13.32	14.69

(Source: ADA publication, Financial Planning Issues for Dental Students)


We have also included some strategies for managing student debt to leave you with.

  Borrow the least amount that you possibly need.

  Pursue family or relatives who might lend to you at a rate lower than your student loans.

  Explore student loan consolidation programs.

  Graduated Repayment Programs - Smaller loan repayments in the early years with larger payments over time.

  Service-Connected Repayment Programs - By practicing in a designated service loan repayment area, the government may allow a predetermined amount of your loan for each year that you practice in such a designated area.

  Repay the principle of the loans as soon as you can.

  Look into part-time jobs to assist in funding.

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Last modified: August 19, 1999