Practice purchase and private employment options for the new graduate with student debt: A projected scenario analysis for loan repayment.

Background: When attracting talent to dentistry, graduates need educational costs justified by future financial outcomes. The authors provide insights into how career choices (employee versus practice owner) and student loan repayment plans (principal-based versus income-driven) can be made to work.

Methods: Five loan repayment and career choice combinations were assessed using spreadsheets (Microsoft Excel) to rationally model monthly budgets and financial decisions during a projected 40-year work life.

Results: Even with high levels of student loan debt ($292,169 average for new graduates), it is still possible, but increasingly difficult, to achieve desirable career, lifestyle, and financial outcomes. Outcomes are highly sensitive to rates of investment returns and inflation. On the basis of the 5 scenarios of projections of debt and income levels to 2060, assuming reasonable levels of investment return and stable inflation, career and repayment choices can make a difference of more than $5 million in lifetime earnings and more than $3 million in retirement savings (2020 dollars).

Conclusions: The new reality of high educational debt requires graduates to budget and plan before beginning their careers. Use of loan servicers, consultants, brokers, attorneys, certified public accountants, and financial advisors is needed. Working for a dental service organization is a valid option for developing dental and practice management skills. Owning a practice is still a viable career path.

Practical Implications: Dental graduates should choose a student loan repayment that minimizes the size of monthly payments, balance budgets, practice frugality, obtain a practice purchase loan at lowest rates, and heed financial advisors.