Resource Article
What does $300,000 in loans look like?
Let’s take a simple example. Dennis the aspiring dentist takes out $300,000 in loans over his 4 yearsof dental school. That’s $75,000 eachyear. First year, he borrows $37.5K atthe start of the fall semester, and another $37.5K at the start of the springsemester. He continues this 2ndyear, 3rd year, and 4th year…$300,000 in total.
Of the $75,000 that he takes out each year, it willroughly be composed of $50,000 in Federal Unsubsidized Loans (interest rate of8.08%) and $25,000 in Federal Grad Plus Loans (interest rate of 9.08%). For a more detailed explainer on FederalLoans for dental school students, read this.
Interest starts to accrue the day you take your loanout. That interest is capitalized (addedto your principal) when repayment begins. Repayment typically begins about 6 months after your graduate dentalschool or a residency program.
So back to Dennis the aspiring Dentist who took out $300,000of loans for dental school. His graceperiod will end 6 months after graduation. This is when repayment begins. So what does his $300,000 loan look like now? Interest has accrued on the loans he took outfor as much as 4.5 years. That’s $69,000of interest that will now be added (capitalized) to his principal. So now he has a $369,000 loan. What does repayment on that look like?
If you pay it back over 20 years, you’re looking at monthlyrepayments of about $3200. Over 15years, it’s over $3600 a month. On a 10year plan, it’s over $4500 a month.
What about if you pursue a residency after dentalschool? Post grad residences lastbetween 1-4 years. Depending on the typeof program you are in, you are able to extend your grace period until aftergraduation. While this delays yourrepayment, additional interest continues to accrue.
Back to Dennis the dentist and the $300,000 loan he took outfor dental school. Each additional yearof residency training amounts to about $25,000 of additional interest. This can turn a $300,000 loan into a $395,000loan with a 1 year residency (AEGD/GPR), $420,000 with a 2 year residency(Peds/Endo), $445,000 with a 3 year residency (Perio/Ortho), or $470,000 with a4 year residency (OMFS). As the tableshows, this can have dramatic effects on your monthly repayment.
