How to Find Dental School Loans
Dental school is expensive, so choosing the right funding strategy is important. Read on for an overview of dental school loans and repayment strategies.
Dental school is a stepping stone to a career with high earning potential and great job security — but the cost of the degree will make you grit your teeth.
That's why choosing the right funding strategy is so important for aspiring dentists. In this article, we'll provide an overview of dental school loans and repayment strategies and help you understand the pros and cons of different options.
Dental School Loan Options
Federal Student Loans
Dental school students are eligible for two types of federal student loans: Direct Unsubsidized Loans and Direct PLUS Loans. They are not eligible for Direct Subsidized Loans or Parent PLUS Loans.
Unlike Direct Subsidized Loans, both Direct Unsubsidized Loans and Direct PLUS Loans will have interest accrue during enrollment and all deferment periods. There is a six-month grace period for both types of loans.
Dental school students are eligible for federal student loans if they complete the Free Application for Federal Student Aid (FAFSA). You must complete the FAFSA by the school’s financial aid deadline. Visit the school’s website to see when the deadline is because it may vary from school to school.
Both types of federal student loans are eligible for the same income-driven repayment plans, loan forgiveness programs, and deferment and forbearance options. Repayment terms for all Direct Loans range from 10 to 25 years, depending on the repayment plan.
Direct Unsubsidized Loans
The annual loan amount limit for Direct Unsubsidized Loans for graduate school students is $20,500, and the aggregate loan limit is $138,500. That figure includes any loans taken out for undergraduate degrees.
For the 2022-23 school year, the interest rate for Direct Unsubsidized Loans for graduate school students is 6.54%. You do not need a co-signer to qualify for a Direct Unsubsidized Loan.
Direct PLUS Loans
If you’ve maxed out the annual or aggregate Direct Unsubsidized Loan limit, you can take out a Direct PLUS Loan, also known as a Grad PLUS Loan. The annual loan limit for a Direct PLUS Loan is the cost of attendance minus other financial aid.
Interest rates for Direct PLUS Loans are always higher than rates for Direct Unsubsidized Loans. For the 2022-23 school year, the interest rate for Direct PLUS Loans is 7.54%.
The federal government will run a credit check if you apply for a Direct PLUS Loan, which isn’t the case if you apply for a Direct Unsubsidized Loan. It will check for adverse events such as bankruptcy, foreclosure and wage garnishment.
If you have had one of these events on your credit report within the past five years, you may have to submit a letter explaining why it occurred. If the reason is not sufficient, you may have to add an endorser, similar to a co-signer.
Health Professions Student Loan
If you have a low income, you may qualify for a Health Professions Student Loan (HPSL). HPSLs have a 5% interest rate, which is lower than interest rates for other federal loans. They’re also the only subsidized federal loans available to dental school students, which means interest will not accrue while you’re in school.
These loans have a 12-month grace period, which is twice as long as the grace period for other federal loans. Unfortunately, qualifying for an HPSL is harder than qualifying for any other kind of federal student loan. Only those students with exceptional financial need will qualify. Also, not all dental schools offer HPSLs.
If you are not eligible for federal loans, have a funding gap or just want to compare different types of loans, you can apply for a private loan. Private student loans will not have the same benefits as federal loans, but you may qualify for a lower interest rate, depending on your credit score.
Unlike the federal government, private lenders will check your credit score to determine your eligibility. Juno offers graduate student loans with five-, seven-, 10-, 12- and 15-year terms. Borrowers can choose from a fixed or variable interest rate. Fixed interest rates range from 3.22% to 7.89% APR, and variable interest rates range from 1.34% to 7.30% APR.
The rate on a fixed-rate loan will stay the same for the whole loan term, while the rate for a variable-rate loan will change during the loan term. Rates will vary depending on market conditions, so the monthly payment may significantly increase if overall rates increase.
Dental School Loan Repayment Options
According to the American Dental Education Association, the average student loan debt total was $304,824 in 2020. Here are some ways to reduce your dental school debt.
Refinance Dental School Loans
Dental school graduates are eligible to refinance their student loans to reduce the interest rate and lower their monthly payments. Let’s say you owe $300,000 in loans with a 20-year term and a 10% interest rate. If you refinance to a 20-year term and a 5% interest rate, you’ll save $219,645 in total interest.
Dentists must be creditworthy candidates to qualify for refinancing. If they are not, they may be able to add a co-signer. Juno partners with three different companies to offer student loan refinancing: Splash, Earnest and Laurel Road. Each lender has its own perks and benefits, but all offer low rates for dentists.
Loan Forgiveness Programs
Dental students with federal loans may be eligible for loan forgiveness programs such as Public Service Loan Forgiveness (PSLF). To qualify, you must make 120 payments on an income-driven repayment plan while working full-time for an eligible employer. Eligible employers include government agencies and nonprofit organizations such as community health clinics.
Loan Repayment Programs
Loan repayment programs (LRPs) will pay back some or all of your student loans if you work in a certain area for a period of time.
LRPs are similar to the PSLF program, but the employment requirements are often more strict. You usually have to work in a specific underserved area, and most contracts last at least two years.
However, an LRP can be a good way to get some of your loans forgiven quickly. The American Dental Education Association has a list of loan repayment programs for dentists.
Rates accurate as of Aug. 23, 2022.
Zina Kumok is a freelance writer specializing in personal finance. A former reporter, she has covered murder trials, the Final Four and everything in between. She has been featured in Lifehacker, DailyWorth and Time. Read about how she paid off $28,000 worth of student loans in three years at Conscious Coins.
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