Tips to Tackle Dental School Debt Post-COVID-19

More to the point, how do you go about paying down your dental school debt efficiently?

Dental B-School has some tips to help confront your student loan obligations and ultimately, decide how to manage them.

Pay Your Dental School Debt Smartly

As we muddle our way through another recession, it may be tempting to pay down your student loans as fast as possible.  Some choose to pay down a smaller loan amount first to have one less debt, while others may choose to pay down those with a higher balance.  

When applying extra payments to your dental school loans, or really any loans or debt, you should take the interest rates into consideration when determining where to apply those payments.  For instance, a higher balance with a lower interest rate may end up costing the same as a lower balance with a higher interest rate.  The higher the interest rate, the more you’ll end up paying for that loan.

Also of note - Always check with your lender as additional payments to the principal of a loan may need to be handled a certain way.  For instance, you may need to phone in your additional principal payments to ensure they are applied to only the principal versus accidentally paying for next month’s balance.  Paying down the principal reduces the overall total you’d spend in interest.

Refinancing Your Loans

To refinance or not to refinance? That is the question.  When considering whether to refinance your dental school debt, somethings you’ll want to keep in mind are:

 1) government repayment programs 

2) shop around by talking to various lenders

3) opt for flexibility that will give you the ability to pay off your debt early

Not all refinance programs are created equal.  Do yourself a favor and research your options before diving in. Different lenders will have different rates, terms and resources.

Don’t Forget About a Rainy-Day Fund

As a young, budding associate in the Spring of your career, paying down your student loans may not be the only financial obligation you encounter.  You may choose to purchase a home or car, perhaps just move somewhere a bit nicer.  When considering debt and debt repayment you’ll want to take into account both your short and long term financial goals to determine whether tucking some money aside for a rainy day fund or a savings account may be the best option for you.

CARES Act Relief for Dental School Loans

The COVID-19 pandemic left many financially devastated.  During this time the Coronavirus Aid, Relief and Economic Security Act (CARES Act), signed into act on March 27th, provided some temporary relief for federal student loan borrowers.  The caveat to this would be that those with private loans would need to work with their lenders as the U.S. Department of Education does not have legal authority over private student loans, which are therefore, not covered by the CARES Act.

Those participating in the Federal Direct Student Loan program can learn more about what protections they are afforded under the CARES Act here. 

Bottom Line Up Front (BLUF)

Debt can be intimidating, especially as it continues to accumulate with student loans, car notes, mortgages, credit cards, etc.  It may seem overwhelming but look at it like this - your student loans are like an investment.  And what better investment is there than to invest in yourself?  When managed effectively, debt can be a great financial tool.  Remember, you did not go to dental school just to work at Walmart.