Pros and Cons of Dental Residency Loans

Dental residency loans can help carry you through the gap between your dental school loans and your salary in residency. They can also help cover living expenses if your residency salary is too low to meet day-to-day needs. While these loans can be necessary, they can also lead to large debts and extended repayment periods.

Gap in Loans and Salary

Your dental school loans will cover the cost of tuition while you attend school. Then, you will make the shift into residency. Doing so requires you take your dental boards, travel to residency interviews, and potentially relocate to a new city or state for the remainder of your residency. All of these things take time and money, and you will likely need assistance to get by during this period. Dental residency loans can cover the cost of studying for and taking your board exam. You can use the loans to pay for travel to interview at residency programs, and you can even use the loans to cover the cost of meals and hotels while you are away from home. Finally, if you do match in a residency in a new location, the loans can help you get your belongings and/or family to the new location.

Meeting Living Expenses

Once you are in residency, you will be able to earn a small salary for the first time in many years. Unfortunately, this salary is not often high enough to cover the cost of living associated with being a young adult. Graduate students and residents tend to have higher costs of living than undergraduates, but these starting salaries can be even lower than student loan sums. Residency loans help meet some expenses, such as groceries, utilities and rent, so a resident can live comfortably while completing the final part of the dental school experience.

Incurring Large Debts

Unfortunately, the cost to cover dental school is already very high. Adding on residency loans can mean the total debt incurred will be almost unmanageable. This is particularly true if you also have undergraduate loans to pay off. Incurring debts in the hundreds of thousands of dollars may mean you face monthly payments that take the large majority of your paycheck as a young dentist. This can also make it hard to get other loans, such as mortgages or car loans, since your existing debt is already so high.

Extending Repayment of Loans

Most lenders offer dentists the chance to opt for extended repayment, meaning they pay only a very small sum on the loan each month. While this eases the monthly burden, it increases the overall cost of attending school to become a dentist. In addition, dental school and residency can take up to 7 years to complete. This means most dentists are around 30 years old at the time they exit a residency program. If you are 30 years old and opt for extended repayment on residency loans of up to 30 years, you may be in debt until the time you are 50 or 60 years old. This can truly reduce the profitability of becoming a dentist in the first place.

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