Educational debt

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August 31, 2022

There is both good news and not-so-good news regarding borrowing for dental school, but just remember two important principles when you start thinking about student loans for dental school:

  1. Never borrow more than you really need.
  2. Plan to pay back what you borrow.

  • 17% of dental school graduates in the Class of 2021 reported no student loan debt.

  • Average educational debt for all indebted dental school graduates in the Class of 2021 was $301,583, with the average for public and private schools at $261,226 and $354,901 respectively.

Good news

  • Dental school graduates have a great reputation for timely repayment.
  • You can currently fund your entire COA (Cost of Attendance) with federal loans with a combination of federal direct unsubsidized and federal direct PLUS (formerly known as Grad PLUS), negating the need for private loans.
  • Dental school graduates typically enter the income stream after graduation faster than other health professions colleagues, which may allow for aggressive repayment.
  • It is easier than ever to track your federal student loans at StudentAid.gov .
  • You may graduate with multiple federal loans, but they are likely going to be serviced by just one loan servicer, which negates for many the need to consolidate after graduation.
  • Refinancing at a lower rate with a private lender after graduation is now an option for many dental school graduates.
  • In response to the Coronavirus pandemic, the CARES Act has set interest rates on all federally owned loans (which includes all Direct Loans) at 0% from March 13, 2020 through Dec. 31, 2022. This means that interest on any federally owned loans you have, including loans from college or a post-bac program, will not start accruing interest until Jan. 1, 2023. 
     

Not so good news

  • Your entire student loan portfolio may be unsubsidized, with interest accruing from time of disbursement—interest that will eventually be capitalized (added back to the principal).
  • Interest rates on new direct unsubsidized and new direct PLUS loans are fixed and change each year, and the maximum rates are high at 9.5% and 10.5% respectively. The interest rates on new loans disbursed on or after July 1, 2022 are 6.54% fixed for direct unsubsidized and 7.54% fixed for direct PLUS (Grad PLUS), all the more reason to never borrow more than you really need. 
    • Changes may eventually be made to the income-driven repayment plans as well as the Public Service Loan Forgiveness program, which is all the more reason to never borrow more than you really need.