Dealing with Dental School Debt | Samantha the Debtist

I was on the IBR repayment program, one that requires you to pay like 15% of your discretionary income, which doesn't even cover the interest. Hey everyone and welcome to the Student Loan Planner podcast. I'm really excited today to have Sam from thedebtist.com on the show to talk about how she is paying back her massive student loan debt. So any of you out there who are in dental school or just recent grads that have a lot of student loan debt, this is going to be a really interesting episode for you. So Sam, welcome to the show. Thank you. Happy to be here. What I'd like to do to start off is just to get to know a little bit more about your background with accumulating over 550,000 of student loan debt. So how did that happen and you know, how did you decide that you wanted to become a dentist? Yeah, so I was actually one of those strange kids who knew I wanted to be a dentist since I was really little, probably around eight years old. I was also of the rare kind that never changed my mind. I just kind of stuck with it. So I knew I wanted to be a dentist. I stuck on that path and I started applying to dental school right after undergrad. I ended up getting into one of the most expensive dental schools in the country. It's a private school and I did what most other colleagues in my dental school did, which was take out the maximum amount of student debt in order to pay for the tuition and the housing costs and the living expenses. I graduated with over $550,000 of student loans. It didn't dawn on me how large that sum was until I was in my senior year of dental school and about to graduate and about ready to pay all this money back. And then you said, oh my gosh. Yeah. And then I had a little freak out moment. So question for you, when you were applying to dental school, what kind of conversations did the admissions department have with you about the cost of the degree? Not very much. I actually didn't really talk to the admissions department about how much it's going to cost or what it's going to mean in the future or after I graduate and how it's going to kind of affect my life afterwards. Applying to dental school, pretty much you just do it all online and you'll get a call back or an email saying if they want to interview you or not. And if they don't want to interview you, they'll just automatically kind of reject your application. So if they want to interview you, you'll pretty much go to the school and they tell you what the school has to offer, but they don't really go through like a course of like personal finance or anything like that. So you're kind of on your own. You kind of have to know this stuff before you even start dental school. That's unreal, right? Like what are your feelings about the fact that they let you sign up for a half a million dollar decision without so much as like talking about it first? It's pretty unsettling. If you think about it, we have these essentially kids like 18 year olds who aren't even allowed to drink alcohol because they don't have the supposedly decision-making skills to be able to do that, but they're able to sign documents saying, you know, tying them down to like thousands of student debt. That to me is a little bit unsettling. Looking back on it, it's kind of, I would like to have seen some sort of program to walk kind of these students through and saying like, hey, this is what you're signing up for just so you know. Yeah. And just for fun, like if you were dictator for a day, right, you had unlimited power to change the student loan rules in America in terms of the before school process, like before you start school, what kind of, you know, disclosures or discussions or statements would you require to the prospective students before they agree to sign up for this debt level? I think it would be good, let's say in that interview process, if they included something like a short course or discussion or whatever one hour PowerPoint presentation, whatever it is to explain to them what their options are afterwards and how much it would actually be. I mean, it's hard to grasp that number when you're so young. I think taking out student loans is such a like accepted part of our education system. So when you're signing up for it, it's hard to grasp like, oh my gosh, this is going to affect me in so many different ways. I think just having a simple conversation about it, just to at least get people thinking about what they're doing is just very important and it'll be very useful for future students. That's so true. So you graduated in what year? 2016. 16. Okay. And then we talked a little bit before, but you had some debt prior to October, 2007, right? Yeah. So from undergrad. Okay. So you graduated in 2016. What kind of initial steps did you take when you graduated? Did you consolidate your debt? Did you just call your loan servicer and wait out the six-month grace period? What were your first steps? Actually, so before we graduated from dental school, we had this mandatory, quote unquote, exit counseling course, but it's really just a one-hour session where you were supposed to come in on your lunch break and sign into a piece of paper. Yeah. They just quickly went through your options and what you can do to pay back the student debt. And they made this like blanket statement of like, well, if you have over 400,000, then the best path is to just wait the 25 years and do the loan forgiveness. So a majority of us took out the max. So obviously we all had over half a million dollars in debt. So when I graduated dental school, I was on that path. I was signed up to do that. And there is like a six-month grace period where I was trying to really figure out what I wanted to do. And everyone I talked to was like, no, this is the only path. This is the only way you could pay back the debt. I was told to consolidate my loan, so I did. I consolidated all my loans into one. It wasn't actually until a couple months, I want to say, after the six-month grace period was over when I decided to pay the loans back aggressively. Okay. And this is one of the big points of discussion that we're going to have in the show. So you had 550,000, and then what was your starting salary when you graduated? The first year I only worked October, November, December. So that year my salary was really low, it was like 24,000. But then my first full year of working as a dentist, it was 125,000. Okay. Which is typical for Southern California, right? Because it's pretty saturated. Exactly. Yeah. So 125,000. And then one of the reasons why I know that you were interested in paying the loans back in full was because of getting married, right? So maybe you can tell us a little bit about that discussion when you guys started talking about finances and you revealed you had this debt amount, like how that went and what kind of discussions you had about that. Sure. So I actually met my now husband back in undergrad. So he was with me when I signed up for this. So he kind of already knew there was this huge debt tied to me. He knew it was coming. He knew it was coming. He did. But I think I didn't really understand how much it was going to affect us as a married couple, because he's a pretty frugal person. He actually spent a majority of his adulthood, like not accruing any debt whatsoever. He's good at saving. And so I come in with like this much student that just because of like the, I guess, career I chose to pursue. And I thought it wasn't very fair to bring that into the relationship. And he's been the motivating factor for me to really just get rid of it, get out and just be free from the debt. That's cool. So his, his mentality was, I don't want to have this for 25 years. I'd prefer if we put your entire salary towards this or what was that conversation like? Yeah. So it was actually me pushing it to get rid of the debt as well. And I have no problems at all with, you know, this is what I wanted to do for a living. So I understand it's not such a bad thing if I just put all my salary into it and we just live off of a one person income because that's what both our parents did. So to us, it was like, if our parents were able to do this with children to live on like a single household income, then we can do it too. And then we just bite the bullet and get rid of it as soon as possible, less than 10 years. And then we'll be free to continue on with our lives. And, and yeah. Sure. So how, how much are you paying currently a month towards your student loan debt? Currently we're paying $6,500 a month. Okay. So in $550K, you're really paying off a lot. So you had initially $550K, how much do you have now? Actually, the initial number was $574K and now we're, we're down to $494K. So you made it below $500K. Yeah. So we're pretty excited about that. That was like a big moment. Yeah, I know. Like big psychological victory. So one of the things that we talked about, obviously, was my goal is to always give people all of their options. And it's not my job to select what path that you should take. I do feel like it's very important for people to be fully informed about the consequences of all of the different decisions that you're going to make with student loan debt. Obviously, when somebody has that amount of debt, and you live in a community property state like California, you know, you can file taxes separately and pay like somewhere between $800 and $1,300 a month. And you can do that for 20 to 25 years. In your case, you're not eligible for pay. So you can do a revised pay-as-you-earn or IBR for 25 years. And then at the end of that, let's say you owe, you know, a million bucks, just hypothetically, we're not actually talking the exact numbers. But then you have to pay $400,000 in taxes all at once. If you look at the cost of that, in terms of present value, in terms of the cost in today's dollars, obviously, that's cheaper, assuming a couple things, right? You would have to probably not become a practice owner, at least one that makes more than like $300,000. Yeah. $350,000, something like that. And in Southern California, like that's actually a very high probability that you're not going to hit that income level, right? Yeah. Because there's so many of us. One of my clients one time, he's like, you know, what's terrible is three bad Yelp reviews could end my practice. Yeah. And he was like in Beverly Hills. I'm like, are you kidding me? Because I talked to the dentist over in like rural Iowa, and they're like, wait, Yelp? Like, what's that? It's hilarious because it's like amazing how easy it is to get customers when like your choice is drive two hours to the nearest extraction spot, or you can just go to the office in town and you can just charge whatever you want. Yeah. But here it's like, oh, there's a dentist like right across the street. I could see them. Yeah. Yeah, exactly. Like, oh, well, yeah, the dentist across the street will do cleaning for $50 when it costs them $60 to pay for the staff expenses, you know? So yeah, I'm going to go to losing money. So like, if we're having this conversation, normally, I would advise very much against that. But there's a side to paying back student loans that is emotional, that's not necessarily all numbers, right? You made that decision that you want to be debt free, you want to pay back the debt, you don't want to put it towards investments or retirement. And tell me about your practice ownership goals. Like, do you have any of those in particular? Are you down to just be an associate long term? What do you want for your career? Yeah, so I never wanted to own my own practice. And so when I graduated from dental school, I knew I wanted to work as an associate right away. I didn't do a residency. Before dental school, I worked as a dental assistant. So I went back to work with that dentist and his two offices where I used to work. And I already knew that business. And so I was comfortable there. My dream is not to do dentistry here in California forever. I'd really love to actually travel the world and go back to third world countries and do dental work pro bono in third world countries once the debt is paid off. So that's one of the reasons too, I don't want to buy into a dental practice as well. That makes sense. So one of the points of like, you know, fun discussion that we had, we were chatting was moving abroad. So moving abroad, when you have this kind of student loan debt, the answer that I would give to you, if I didn't know how passionate you were about paying down your debt, was that you could use the foreign earned income tax exclusion. And you could make your adjusted gross income instead of it saying like, whatever it says, you can exclude up to, I think it's a little over $100,000 of income you earn overseas. Then your adjusted gross income can be zero. And so then you can be making qualifying payments towards loan forgiveness with payments of $0 a month. Say you had like $150,000 that you'd put into the loans already in a brokerage account. You could take that $150,000 and pretty well assume that it would grow to cover your tax bomb in 25 years. So, you know, an alternate path to somebody who really wants to go do that initial type of work right now would be to cover the tax bomb first, and then to move overseas and use the foreign earned income tax exclusion to pay $0 a month on your student loans on a plan like revised pay as you earn. I do have a question about that too. So if they choose to do that, would it make sense for them to stay outside of the U S then for the rest of the 25 years? So they're kind of like committing to being outside of the U S or could they always come back? And it's like, if they're still saving money because those few years they're paying like $0 interest. So the deal and trying to figure that out is this, you need 25 years worth of credit. So let's say that your goal is to go over there and serve overseas for 10 years and maybe have the freedom to come back to the United States. You could absolutely do that by simply doing the revised page you earn. And then you would both get that a hundred thousand dollar write off on your taxes in the U S because presumably you're paying taxes overseas. And that's why that is set up the way it is. So your combined monthly payment in that case for your student loans would be $0 a month. And if you come back to the U S after having 10 years or more of credit on loan forgiveness under a plan, like one of these plans that we've been talking about, then you might only have like say 10 or 15 years left to go where you'd have to be making payments that are based on your income. So if you went overseas, like now for 10 years and paid $0 a month, like on the revised page, you earn your interest subsidy would be 50% of all of the interest. So instead of, you know, 7% or whatever your average interest rate is, it'd be cut in half. And so you would be in a position to have interest that's accruing, not compounding at a rate of like three and a half percent. So what that means is instead of the interest growing on an exponential rate, it'd be growing at a linear rate. And so you would maybe leave with, you know, say hypothetically you just left with 574 in debt. You could probably come back in 10 years with, you know, I have to run the numbers, but maybe like, you know, 700,000, for example, instead of like having it have doubled on you or something like that. And so then if your goal is to do this kind of work and you have the ability to do it now without waiting, is that worth it? Right. Is that something that you would be willing to sacrifice and change your approach for that reason? So that's like one of the reasons why it's so important to know all your options, because, you know, once you know all the options, then it's like, well, huh, if I could go over to Southeast Asia or Europe or South America or wherever I wanted to go and perform services, I can do that right now. And as long as I have my tax bomb put away at the very worst, I have that money put aside. That's going to cover the tax consequences. And even if something happened to loan forgiveness, I can always come back and, you know, put that big lump sum towards my debt because the debt only grew at a linear rate and then potentially refinance at that point if interest rates in the economy are such that you can get a lower rate through refinancing. So that's just like an example of how, I don't know if you've ever thought about that, but you could actually, if you were willing to abandon the strategy that you laid out, then you could actually move overseas right now and start doing this kind of work. Yeah. That's a really good option. Yeah. I think for us, it's like, we just want to get rid of it. Yeah, I know. Which is totally an emotional decision, obviously. Right. Exactly. So part of the decision that you made could have been optimized more. So yeah. And from a financial standpoint, for sure. I think even just staying with the regular loan forgiveness program is still a more financially optimized strategy than paying it down in less than 10 years. I think the 10 year thing that we chose was very, just like the psychological weight of having debt. We just wanted to get rid of it. Yeah. I understand. And so then, so for a more optimal approach, right? So say you graduated from USC and you have the big debt. So with the consolidation, instead of waiting in the consolidation, what I would have done is consolidate that debt immediately after grad school. And then if you did that, then you would be able to honestly state that you have a $0 a month income. The rules back then were a little bit more permissive of stating your income is lower because of the previous year's tax return. Seems like they're kind of getting a little more strict with that. So for that reason, it's best to try to consolidate as soon as you get out of school so you can use the prior year tax return to state that you have a $0 income because you're not technically working yet. And then what you can do is get those $0 required payments on revised pay as you earn. Well, if you have almost 600,000 of student loan debt, then your interest charge is, let's say it's $35,000 a year. So if you are on income-based repayment, which you were on when you graduated, I think, and filing taxes separately, right, Sam? Exactly. Yeah. So in that scenario, you would have had a $0 payment, but you would have gotten that interest subsidy of 50% of all of the accrued interest that the payment you're required to make is not covering with the monthly payment. So instead of paying that $35,000 in interest for that first year, your interest would have been $17,500, right? Right. Yeah. Under the repay. Under the repay. So that's one kind of illustration of how important it is to make sure that you're on the right repayment program for what your long-term goals are. Right. So that's okay. We discussed right now why it's even a good idea to probably have you switch to revised pay as you earn instead of income-based repayment, because your required payment would still be drastically less than the 6,000-something that you're paying, and you'd be getting interest subsidies that would cause more of your money to go to principal instead of interest. So Sam, one of the things that I'm interested in is, can you tell me a little bit about the repayment program that you on when you were exiting dental school in the past couple of years? Yeah. So I was on the IBR repayment program, one that requires you to pay like 15% of your discretionary income every month, which doesn't even cover the interest, of course, that you're accruing on a loan this large. And then this goes on for 25 years, I believe. And at the end of 25 years, the government will pay back the rest of the loans, which will be bigger than what you started with, because the interest is accruing over 25 years, and then you have to pay for the taxes on that they paid off. For sure. Yeah. And I think, I don't really remember why we chose this. I think it's because it has, versus the repay, it has like that filing separate tax returns. And so on that first year, since it was only like three months of work, I think I only made like 25,000 versus like, if I had done the repay and my husband's income was included, it would have been like 150,000, and it was like a big difference. But I'm not sure if that was the smart thing to do for that first year or not. But I think that's why we did it. Sure. So what's interesting with that is, with IVR, there's no interest subsidy, right? So if you're not going to go for forgiveness, and there's absolutely no reason why you would care about what your required monthly payment would be. So with Revised Pay As You Earn, if you can get the lowest payment possible, then you get a higher interest subsidy, because that subsidy is based off of half of the interest that's left over after your required payment is accounted for. So we had switched to like paying it off aggressively. So no interest is really accruing. Then would it matter, let's say someone did choose the path we chose, and then they pay the 6,500 a month, then no interest would accrue because they're covering that interest? Then would the repay still be beneficial? Yes, it would. So that's true. But the way that most of the servicers are accounting for the interest right now is they calculate what the subsidy would be at the very beginning of your repayment period. I see. And they apply that subsidy automatically monthly. Basically, they calculate the interest that you're responsible for, and then any extra payments basically are going more towards principal instead of the interest that's accruing. Okay. So this is regardless of what you choose to pay per month? Yeah. Oh, nice. That's good. So it's really, yeah, it's very powerful, and it's a very powerful program. It's a very common misunderstanding or misconception. So for someone out there who wants to pay back their loans in full, refinancing is not the right plan yet for them, then going for revised pay-as-you-earn is definitely a much better strategy than doing IBR because you're having to pay back less interest, and more of your money is going towards principal. After all, that's the goal, right, is to get out of debt as soon as possible. Nice. Yeah. So in terms of doing the kind of work that you wanted to do, which is going overseas and serving people overseas, if it was possible to go over there much, much sooner than you thought, what would have to be the case for you to potentially do something like that? Or do you think that getting out of debt is so important to you that there's just no way that you would do that until your debt is mostly paid off? I think for us, from our personal standpoint, I think we want to just get rid of the debt, and then once it's out, then we'll go ahead and pursue that together. Do you think that you, to kind of ask a personal question, are you guys thinking about having a family in the US, and how does that come into play with your loan strategy? Yeah. So currently, we don't have any kids, and we don't have any plans to have a family in the US. So it's kind of helping us actually with the repayment, because I'm sure once you start thinking about future family and shaping your future, it definitely affects your plan. Right. And that's why I think that I would never recommend this path to your typical person who has your kind of debt and your kind of income, because the thing that will typically happen is you will sustain this for a couple years, and then if you are a typical dentist in Southern California, then you might have family, right? And then regardless of whether or not you're able to sustain the same income with getting paid maternity leave or paternity leave or something like that, you definitely will have daycare expenses, unless you have a family living in your area that can cover that. So that's an additional, usually $2,000 a month, if not more, just for daycare, right? And then tack on all the other expenses of having a child like diapers, baby formula, all those things, all of a sudden paying $6,500 a month turns into paying $3,500 a month. And if you're paying $3,500 a month, then with that kind of a debt size, you're kind of more on a extended type of repayment program. And if you're on an extended type repayment program, then why not go ahead and roll the dice with loan forgiveness if you're going to take 25 years to pay it off anyway? Yeah, definitely. What I think people who just graduate with, I feel like you have to choose right when you graduate or really close after, because obviously if you do the loan forgiveness, you got to pay as small as possible towards your debt. And if you do it the other way, you have to be as aggressive as possible. And if ever you flip flop in the middle, you end up losing a lot. Yeah. A lot of money. It's bad news. Yeah. Right. Really bad. The cool thing though, is say that knowing about that foreign earned income tax exclusion, the ability to pay zero and have the interest accrue like that more slowly, say you got really excited by that. One thing that I tell you in undergrad economics classes is sunk costs are sunk costs. You can't change the past, but you can always change the future. So if you wanted to immediately move to another country and be a dentist over there, you could do that as long as you can get all the visa stuff worked out, and that's okay. And if you want to pay off all the debt over first before moving overseas, that's okay too. The main thing is, is if you were going, if there was any chance that you were going to deviate from that massive payment strategy, then that would be very costly thing to do. It would just take you about the same amount of time to get out of debt. And then you would also have the really crushing interest that you'd be paying instead of going for forgiveness. So let's talk a little bit about buying a house. So how does someone buy a house when you have a ton of student loan debt, especially in a place like California? Yeah, we recently purchased a house. It's actually like getting student loans very easy. So there's a 40% rule where they would like your mortgage to be no more than 40% of your total household income. But what they do is if you're under IBR or repay, they actually only look at your minimum monthly payments, regardless of whether you're paying more than that or not. So they're looking at these teeny tiny monthly required payments under the IBR program. And they're saying, oh, obviously, on a generous income, you're making more than 40% of what your mortgage payment would be. That's cool. So how much more was the house than your combined income? Like did about two times as much or three times as much? Yeah. So I'm totally happy to share numbers. Our combined income is around like 250 last year. And the house was 500, which was funny because it's less than the student loans that I had. I know. And this is in Southern California. So that was actually not a bad price considering how a majority of houses around here are like 800,000. Right. So yeah, people that buy houses in California usually freak me out because I see the mortgage, I see the costs, and I see the housing prices to decrease with the new tax law change that happened. So the new Tax Cuts and Jobs Act caps the deduction for property taxes and state income taxes at no more than $10,000. And it limits the deductibility of mortgage interest to no more than a $750,000 mortgage. So if you're buying a house in California where like 800,000 and some people consider that entry level, you could have gotten approved for that $800,000 house. And if you did that, then you not going to have any money left over to cover your student loan debt. Then suddenly your plan gets on the longer term repayment plan because you're not paying as much and then financial disaster. So great job at limiting your house purchase price to no more than two times your joint income. I just wanted to point out too, the mortgage that we're paying on this house is actually cheaper than when we were renting the same amount of square footage in the same city. And so that was part of our driving force as well. We're saving money paying on a mortgage than we were renting the exact same thing. So yeah, that's kind of interesting with Southern California. I feel like the rent rates here are really high. Oh yeah. And the only caveat that I'd say to that is I tell folks, if you can rent a house for less than half a percent of the purchase price per month in monthly rent, then I vastly encourage people to... I vastly would prefer that people would rent and not buy. And if you can get a mortgage for basically your mortgage, if the rent is over 1% of the purchase price of the house a month, then you're better off buying that house instead of renting it. And if somewhere in between there, so maybe you have a $3,000 a month rent for a $500,000 house, then you're somewhere in the in-between stages. So if your goal is to move at any time in the next five, I would even say to 10 years in a place like Southern California, I would suggest people not purchase a house. But if your goal is to be there very long-term, at least a decade, and you limited your purchase price to no more than two times your income, and you're willing to stay there no matter how tight or cramped it gets, it's amazing to me how many people tell me that- Want to come here. Well, come there, but then they come there and then they're living in the two-bedroom apartment that they can afford. And they're like, oh my gosh, having two toddlers is so crazy. I'm going crazy. I have to buy that four-bedroom house because there's just not enough space for all their toys and I'm going to go insane. And to that, I'm like, well, if you do that, then you're not going to have retirement. You're not going to have all these other financial goals you want to accomplish, right? So let me ask you this, Sam. What point are you comfortable giving up all these government protections, giving up the revised pay-as-you-earn, giving up all of these flexible options, like moving overseas and paying $0 a month for doing a private refinancing to lock in a lower interest rate? Okay. So currently our interest rate is 6.7% and we were actually considering refinancing our loans just recently. When we made the decision to purchase the house, we kind of had to make a decision between refinancing and purchasing a house. And the reason for that is, you know, obviously one affects the other. If you refinance, you have a larger loan, so then your monthly payments are larger. So you're less likely to get a mortgage for a house, get approved for one, and then vice versa. If you get a house, you're less likely to get approved to refinance the loan. So we went with the house option and we were considering refinancing the loans, but just recently we decided to change our mind just because of the flexibility that the loan forgiveness programs give us. You know, we can still pay it off aggressively, but if some crazy emergency happens where we need to for a month or two months or whatever, go back to that minimum payment, we can do that. It does create like the safety net. So I think that's something people should consider as well. Yeah. And I think that we're probably on the cusp of having another recession at some point soon. I've been hearing that. Yeah. Well, I mean, that's easy for people to just say, right? You never know, but still. Yeah. You can't predict the future. So if you did a 15-year refinancing and got a five and a quarter percent interest rate, that's about $3,900 a month. And your job is pretty secure. You're not going to go anywhere with your job. Your husband's job, I think, is somewhat secure, right? Like it's probably not as secure as yours though, I would guess. Right. Yes. In that case, you could certainly have a decrease in your income and you still have that mortgage payment that you have to make no matter what. So it would be very challenging in a really deep recession to make a $3,900 a month payment on your student loans and to pay the mortgage. So doing revised pay as you earn and getting the interest subsidy at least until your debt balance is below 400,000, it's probably a lot safer. And also, let's say the next recession happens and we come out of it, I guess the one downside is you might see a lot of these student loan refinancing companies collapse because a lot of them are funded with venture capital funds and the credit spreads in the economy, which just means how much investors have to receive in order to lend people money that are not the government that have some sort of credit risk. That gets a lot more expensive to borrow. So I think you could see the opportunity to refinance not be there in but I still think that it would be much better to have that flexibility around being able to pay as a percentage of your income. So with revised pay as you earn, luckily you still get a subsidy probably until your debt is well below the $400,000 level. You'd have to run the numbers to be sure, but that's exciting that even though if we could go back in time, which nobody can and be on revised pay as you earn, we would have, well, actually you can be on that now. And still save money. Yeah. And that's kind of significant. I think when I looked at the numbers, it was like $10,000 a year that you would save at least for the next year, say you pay down like 100,000 again, then the interest subsidy might only be like a few thousand bucks, but that's still kind of making your 6.7% interest rate look more like a five something. Yeah, exactly. Which is what you'd get with refinancing anyway. So one concern that I have is you qualifying for refinancing. The best deal that I know of in Southern California is First Republic Bank. And we have a $200 refer a friend link on our site. Maybe you do as well, say I'm not sure, but that gives you at the time of the podcast recording as low as a 3.95% rate in 15 years, which is really good, but they will only do a maximum of 300,000 in a refinancing. Yeah. So that's what I've been finding with a couple of actually student loan refinancing companies is they have a max. And so with people graduating from the same school I graduated from, it's kind of, we go over that max. Right. Exactly. So that is telling you that the private sector is basically telling you don't pay this back. So again, like if you want to do what you're doing, I think you can make that decision, but you just have to know if somebody is doing this prospectively, like what you're getting yourself into and what you're committing to. Of course. Yeah. Cause the worst we could do is commit to it. And then later on be like, I actually can't do this. Right. Exactly. And with the refinancing, like you would also have to have, I think it's like 15% down to do a 300K refinancing for First Republic to feel comfortable. And you'd probably want to see like a debt to income ratio below two to one. So what you'd probably have to do to get the max interest savings is you'd probably have to refinance with a national lender and probably get like a mid 5% type of rate. Once you got below the level where you're getting an interest subsidy on revised pay as you earn. So, you know, you knock it down to below like 400K and then maybe you refinance like 300 and something. Yeah. Yeah. And so then maybe you pay it down to like the 300 level and then maybe having another conversation with, you know, a First Republic bank and get it refinanced to the lower rate. And you know, obviously I know I'm a debtor. You have some refinancing links, you know, studentloanplanner.com. We have refinancing links as well. Get people cashback bonuses for refinancing. So much appreciate you all using one of our links when you do refinance your student loans because you'll get a better deal. But that's really interesting though, that there's all these nuances, right? Where you have to like refinance at this level and then be on repay until this level. And then maybe look for another lender that's a specialty lender that's based off of where you live again, when you hit another level. So let's talk a little bit about if you could do it all over again. You know, obviously no one can, but let's say you could, what would you do about your path in dental education from, and take that to mean like in any regard, financing your school, like all of it? Yeah. I mean, I would do a lot of things differently. First off, the two schools that I got into were both private schools, one in Ohio, one in California, and they cost about the same. But when I started already at the school I went to, I actually got an offer to like a public school, but I was already, I already paid for like the first year supplies. I paid for the first trimester's tuition. So I was looking very like short-term. I already signed a lease for like an apartment complex near the school I was going to. So I was looking short-term and like, I was looking at the inconvenience of losing that money and choosing a public school. But in the end, I probably should have done that because it would have saved me like a hundred thousand or a little over a hundred thousand dollars in student debt. But there's a lot of little things too. Like I think I could have just been more frugal. You know, I didn't really, I was like the typical 20-year-old who was like, oh yeah, let's go to happy hour. Let's go eat out. Let's go, you know, get some drinks or whatnot. And I could have done a lot more better life choices as I was going to dental school. I could have been saving money instead. And then as far as paying back the student debt, once we got to that point, I'm pretty happy with our decision to pay it back in full. I think it's just, like I said, been more of like a, it would have been a psychological weight if we had kept it for 25 years or if we had chosen to keep it for 25 years. And so that kind of has worked out for both of us really well. Yeah. You know, you should check out deeplyindebt.com too, which is another similar story of a dentist who had a ton of debt who just- Bit the bullet. And his family, yeah, just decided like, you know what, we see the numbers. Like I ran the numbers for them too. And it was like forgiveness was the best strategy from a math standpoint. And they thought about it and they're just like, you know what, we just cannot get comfortable with that. For them, I think it was also like partly faith-based. They just had this view of debt that was not a positive view of debt and they just didn't like the idea of it. And basically what I like to do, Sam, is I like to try to be kind of mean and make somebody feel really bad about the idea of paying back their debt if the math says that they shouldn't. And I like to be kind of a jerk. And then if you survive the meanness, then it's like, okay, well then you're committed enough to make it a potential thing that can actually happen. And it's funny because sometimes I will, especially when somebody is like, I really disagree with their decision to pay it back. I will really work on them hard. And if I can find any way to talk them out of it, then I try to. Simply because in my experience, not every time, but almost every time somebody who takes that approach where they should definitely have gone for forgiveness, I'm not talking about a marginal case, right? I'm not talking about somebody who has like 300K. Yeah. And the gray area. Yeah. Like the gray area. I'm talking about somebody who has a 600K from NYU or something, and they're like, no, I absolutely want to pay it back. And then they come back in like six months or a year, or maybe they had a kid and then they're like, oh my gosh, what am I doing? I paid $120,000 towards my loans and my loans went down like 80K and I have no retirement savings. And like, I lived in rice and beans for a year. What am I doing with my life? Right. That's what we don't want to have happen. Of course. Yeah. One thing that I saw was, it was really interesting that I love your thoughts on is about 10 years ago, I'm going to be honest, I'm somewhat making these stats up, but I swear I saw them somewhere. That was about 3000 new grads a year for dental school that were coming out like 10 ish years ago. Now that number has doubled to about 6,000 per year. And we're, you know, obviously seeing the massive growth of corporate dentistry, your Heartland Dentals of the world, your Comfort Dental, all these places that want to have a giant group of employees who are very committed to working for these organizations long-term because they don't want to necessarily do their own dental practice. Do you think there's a bubble in dentistry where we're going to reach a point where the market is so saturated that incomes start going the opposite way instead of increasing, they start decreasing on average? And do you think that at some point something's going to give? Yeah, so definitely. It's kind of scary seeing how many dental students are graduating at this point. And I know like for some other medical professions like pharmacy and stuff, you know, they're seeing so many kids graduating that they can't actually get jobs. So one of two things would probably happen. Either our income levels start to decrease or people are graduating from dental school and they can't find jobs. Currently right now, I think a lot of the dental students who I know who are graduating, they're still able to find jobs, but it's going to be one or the other, right? It's kind of unsustainable. Yeah. Like I'm glad you brought up pharmacists because pharmacists for the people who aren't in that world, I didn't know this until recently, pharmacists are having a lot of trouble getting full-time hours in a lot of places. And that's shocking. I would guess, Sam, that if you ask like a random family member of yours, what are the safest jobs? Dentistry would be probably like one of the top three and then pharmacy would be in there too, right? Yeah. But it's not anymore, you know? And the crazy thing is they're still creating pharmacy programs because students are still signing up for them and students are still willing to pay for them. What happens is on the other side, once they graduate, it's like, there's no jobs open. So it's kind of sad. And like the concern that I have, I see a lot of families that will encourage their children to go into these kind of professional programs when maybe it's not their passion. And maybe you go become a pharmacist because maybe you're second generation and your family has expectations for what kind of job you're going to do. And you really don't want to go be a doctor or a dentist or something. So you go to be a pharmacist. So the issue with that is if your skillset is not like, I've been working my tail off to get into pharmacy school or dental school, or if you're even like a little bit reluctant, like your credentials might show that, that you're a little reluctant. And then the places that you're going to get in are the easiest places to get in, in that case, if you're not super passionate about it. I guess what I've seen is people will oftentimes be from second generation families or people who are like first generation college or folks that were career changers. And these programs are popping up because there's no limit on the amount of loans that can be borrowed for federal student loans at all. There's no limit. The schools have figured this out. And so they're like, wow, as long as people are signing up, why don't we just make a new program and charge 300,000 for it? And then we just made this massive boost of revenue. We can hire more people. We can spend more money on our endowment, whatever college is doing. So I think the high cost private dental schools are huge offenders in this space. And so I think the prestigious ones, generic prestigious names that are big universities have really expanded their class sizes. I think that that's been the case of a lot of the private schools because it's such a money-making opportunity for them. But dental schools, I'd love to hear your thoughts. I know that there's been a few that have opened up recently. Do you know if there's any plans for new ones? Not in California, at least, but I still think there's a lot of dentists who are graduating. And you can tell because it's becoming more and more saturated. Maybe I see that more because I'm in California. Obviously, there's other places in the nation where you could go to be a dentist and there's not competition. But yeah, at some point, I think there's going to be too many of us. Yeah. Yeah. And so when that happens, you will hopefully have no student loan debt, nothing to worry about, right? Yeah. Hopefully it's all free. Yeah. Right. So there's so many opportunities there for you and your husband to optimize your finances with your stated goals. And that at the end of the day is what I'm hoping to accomplish with Student Loan Planner. And then at the very minimum, what would you want people to get out of thedentist.com? Pretty much, I just want to show people that first money shouldn't be the only deciding factor. You could choose to do the loan forgiveness path, but then you'll be really unhappy if you have this debt with you versus just choosing the one that's going to make you most happy, I guess. Absolutely. And how can listeners get in touch with you if they want to learn more? Yeah. So I write at thedentist.com and that's D-E-B-T-I-S-T. And then I also have an Instagram, thedentist, and I have an email. They can write to me if they want. I'm always happy to hear people's stories and chat. So my email is thedentist at gmail.com. Awesome. So if you want someone to talk you out of doing a repayment plan, we're happy to help to learn more about our services. And let me ask you the last question here, Sam, when you pay off your student loans, how are you going to celebrate? Oh gosh, I don't know. Probably just do what I do every day anyway. I don't think I would do anything crazy to celebrate this. I think every day I'm celebrating, it's fine. That's good. And that's the mindset you have to have. Well, thanks so much, Sam, for being on the show. And if you have a lot of student loan debt, be very cautious before going the full repayment approach. But if you do decide that that's the approach for you, take a look at what Sam's doing and realize how much you have to sacrifice to be as successful in what she's doing as she is, right? But you can do it. Maybe. Yeah, maybe. And I'll tell you, max those retirement accounts and put away tons of money in that brokerage account instead and still put $6,500 a month away and make the payments on your loans. And that's the scenario that makes me feel most comfortable from a math standpoint. But as you said, life is not all dollars and cents and you have to feel psychologically comfortable with your life, right? Yeah. Yeah. And I can't wait to read about the deeply in debt one that you recommended. Thanks for that. I'm going to look her up right now. Yeah, that's Amber and Danny's blog. Same kind of story, but it's not easy and they don't make it easy. Like every year it's getting harder and harder to do what you're doing. Like the debt that entering D1 at like a Pacific or a USC or NYU kind of a school that's going to come out with in 2022 right now is approaching, it's going to be probably like 625,000 because of just increased interest rates and inflation and tuition and things like that. So if you know anybody that's going to become a dentist, you need to go to the cheapest place you possibly can. Is that right, Sam? That would be my most important advice is choose the cheapest school that you can go to. And two, like if you want to hit financial independence, like you said something about maybe like one day not having to do dentistry, you can do that with loan forgiveness, in my opinion, more easily because you can get that tax bomb set aside, like the 100,000 that you need to grow into the tax bomb. And then you can always pay based on your income. And then you have to start working on your investments. And once you have 25 times your expenses saved in investment accounts, like a brokerage account, retirement account, plus that tax bomb money set aside, then you could actually quit dentistry and you'd be totally retired even though you have like a bazillion dollars of student loans. Yeah, I definitely would agree that if financial independence is your goal, then the loan forgiveness programs is most optimized. And I actually wrote a blog post about that. If you want to be financially independent, don't pursue medical field unless you really love it. You know what I mean? Yeah, I know, right? Like the one positive thing I can say is I did meet a dentist one time in rural Iowa. She was producing $2 million a year in dentistry, which is insane. Wow, that's crazy. Yeah. Yeah. And she also was only taking home 250K. Oh, wow. And the reason she was only making, like in the typical percentage for an associate is like 30% to 33%. And that's way below what she should have been taking home. And I was like, well, why are you making so little? And she gave me this formula the employer gave her. The formula that determined her compensation was extremely complicated, in my opinion, deliberately so that it would make her feel like she was making a lot of money, even though she really wasn't at all compared to her production. So that's another reason why I do tend to say like, I am kind of really encouraging a dentist to go own their own practice. And if you want to hit financial independence, consider doing like a five-year tour of duty in Cow Pasture, Iowa, or, you know, random plains of like Western Oklahoma or something. And you will make a ton of money in a short amount of time. And you could take out a practice loan to get started with owning your own practice and then sell the practice once the practice loan's paid off. And then you have like three or 4 million in assets. So I don't think that necessarily you can't do healthcare, but you can't be LA. Is 90210 about LA or is that like Hawaii? Oh my gosh. Don't ask me. I don't know. I have no idea. Yeah. I don't know. But all I know is if you want to live in those areas, you're much better off not going to a professional program, having the flexibility of no student loan debt, and then just trying to pursue a job in corporate America or some like entrepreneurial type of thing. Because you have all these customers that are looking for services. And if you're unique and you have a unique business idea, then you could be way better off trying to do that. Right. Exactly. And you also have to remember dentists, they don't really have 401k matches and stuff like that. So if financial independence is your goal and whatnot, and you get into like a company that has a really good match and you have good benefits, like dentists don't have benefits. And so these are just things to consider. You do have to pay for these things too on the side. Yeah. And I will say you can set up your own 401k and contribute way more than the maximum allowed that for employees. So you can hack the system, but they don't make it easy. Yeah. It's not meant to be easy. Well, thanks so much, Sam. We could talk all day. People, you should go check out her blog. And if you're looking for a repayment program, be cautious and don't do anything without an incredible amount of thought behind it. As long as you thought about it and you're comfortable with all the risks and the higher costs that you might assume, that's ultimately your decision. But I just want to make sure you're doing it as most efficiently as possible. I'm sure Sam does too. Yes, I do. Thanks for having me. And that wraps up another episode of the Student Loan Planner Podcast. Remember, you are the person that's going to determine your financial success. Nobody else. You can do anything you want to do as long as you have a plan. So increase your savings rate, get rid of cars that you don't need, cut your housing expenses, hack your life, start saving for your future and invest for the future and get a student loan plan. Folks, reach out to us at podcaststudentloanplanner.com with questions or comments or thoughts for future episodes. And I would love for you to take these actionable tips and apply them to your life so that you can save more money and have less stress.