Debt 101
Overview Student debt has become a forefront issue in this country as the cost of education is on the rise Pay attention now so you don’t need to pay too much later ASDA has tools and resources to help you stay on top of your student debt Financing dental school is a difficult but necessary thing to discuss. Unfortunately, most of us will be taking out loans to cover the costs of dental education. However, as first years, if you get on the right track now, you can keep on top of everything and minimize your future debt. Disclaimer: The websites, applications and businesses references in this guide are not endorsed by ASDA and were suggested by dental students on ASDA’s Council on Membership who have utilized the resources themselves.
What to Do Now? Budget Scholarships and repayment Financial aid Calculate your debt Here’s an outline of what you can start doing now as D1s. First we will discuss creating a budget. Then, we will go into scholarships and repayment. Next, we will go over financial aid and finally we will discuss calculating your debt.
What to Do Now | Budget Biggest mistake people make is not budgeting Set financial goals and make smart decisions Helpful tools: Mint®: Money, Budgeting, Finance & Investing www.youneedabudget.com 1. Limit spending -remember you are a student -use coupons 2. Put yourself on a budget 3. Build your credit -free annual report -annualcreditreport.com -creditkarma.com 4. Maximize what you already spend -tax deductions -find the best credit cards for you -nerdwallet.com HELPFUL TIPS The biggest mistake individuals make in terms of finance is not creating a budget. In order to successfully maintain a low amount of debt, you must must must create a budget! Take some time now and sit down to outline the breakdown of where your money will go. Some good tools to help keep you on track include Mint and You Need a Budget.
What to Do Now | Scholarships Scholarships and grants ASDAnet.org/paying-for-dental-school/scholarships.aspx Repayment programs ASDAnet.org/paying-for-dental-school/repayment- programs.aspx Scholarships The more you bring in, whether it be from tutoring, a job or scholarships, the less you will have to pay back. It sounds incredibly simple but sometimes people forget! There are several types of scholarships out there and here is a link from ASDA that lists a few. Additionally, you can consider repaying your education through national service.
What to Do Now | Financial Aid Apply yearly to FAFSA (Federal Student Aid) www.nasfaa.org/students/About_Financial_Aid.aspx State Financial Aid NASFAA (National Association of Student Financial Aid Administrators) US Dept of Education Financial Aid Resource Database financialaidtoolkit.ed.gov Contact the financial aid representative at your school for help! Every year, you will need to apply to FAFSA following the provided link in order to qualify for loans to fund your schooling. If all of this is confusing to you or if you need additional help, your school should have a Financial Aid representative. Send them an email or stop by their office to get extra assistance! Their job is to help you and they’re very good at what they do!
What to Do Now | Calculate Your Debt Loans (other than private) are backed by the government National Student Loan Data System (NSLDS) Central, integrated database for student aid Tracks loans through entire cycle nslds.ed.gov/nslds_SA/ Many loan servicers have applications to help students manage their debt Nelnets Loan Assistant Loan calculator Greatlakes So now that you have that budget and have gotten scholarships or financial aid to cover your costs of school and living expenses, you can calculate the amount of debt you will have. Most loans are federal loans, meaning that they are backed by the government. These loans are tracked for you. You just need to create an account. Loan servicers have applications and special programs that allow you to calculate and track your debt, as well.
Loan Rates Debt 101 Guide Interest rates vary from one type to the next Create a chart with information about each loan: provider contact balance interest rate repayment terms grace period The Debt 101 Guide is a resource created by ASDA that is super helpful for dental students of all ages! There are many different types of loans so it may help you to create a chart with info about each loan, including the provider, contact, balance, interest rate, repayment terms and grace period. All of these will help you in not only the short term but long run when you start paying back.
How Can I Prepare? Become knowledgeable about your debt Repayment plan options Save for residency applications and licensure exams All of this information about loans can be incredibly overwhelming, but the biggest thing is to not ignore it. Become knowledgeable about how much you take out and what types of loans you take out. Also, keep in mind special costs that may pop up throughout school, including taking boards exams, family emergencies, weddings, applying for residencies, etc.
How Can I Prepare? | Become Knowledgable Understand the “Lingo” Deferment? Accrued Interest? Forbearance? Go to: ASDAnet.org/paying-for-dental-school/financial- terms.aspx for a glossary of financial terms Know your debt and when its time to pay up! Create a personal record of your debt and when its time for repayment Allows for accurate on time payments to avoid late charges and the negative effects to your credit score Understand the “Lingo” Understand these terms and other terms that are unique to student debt. Understanding what these terms is important to understanding your debt and finances Deferment? Accrued Interest? Forbearance? Got to: asdanet.org/paying-for-dental-school/financial-terms.aspx for a glossary of financial terms. Know your debt and when its time to pay up! Create a personal record of your debt and when its time for repayment. This allows for accurate on time payments to avoid late charges and the negative effects to your credit score. You can go old school and create a written note book or create an excel spreadsheet to keep track of all of your debt and repayments Your credit score suffers when payments are missed and penalties can be placed against your accounts that can cost you money as well as hurting your chances of borrowing money later in life CHART: This is an example of a spreadsheet for tracking your debt
How Can I Prepare? | Repayment Options What happens when its time to pay the piper? ADEA has a dental loan organizer and calculator to help you weigh your loan repayment options www.aamc.org/services/first/godental/ Allows for you to visualize what your payments will be and how you need to adjust your career and lifestyle choices to best fit payment of your student loans We will all be making more money once we graduate but that doesn’t mean that you will always have enough to do whatever you want with it. After graduation you will start seeing more expenses such as a house payment, insurance payments, overhead… etc. You will also begin to repay your student loans and that needs to be factored into your budget. The calculator from the AAMC (link shown here) can assist you in creating your overall budget and what options you have in repaying your student loans.
How Can I Prepare? | Repayment Options Types of Repayment Standard: Less overall payment with less interest Graduated: Lower monthly payments at first then higher in the end Extended: Lower monthly payments overtime, but higher overall cost in the end Income based: Pay what you can afford monthly but plan to be paying for decades Pay as you earn: Quick repayment of the entire loan but harder to qualify Standard repayment A ten-year repayment program where you will end up paying less for the overall loan amount because you will pay less interest over time. Graduated repayment Also a ten-year repayment program, but the initial payments are lower at first and gradually increase every two years. In The end, you will end up paying slightly more than the standard plan due to interest accrued during the low payment years. Extended repayment Payments are spread across more years. This will knock down your monthly contribution, but increase the overall cost of the loans due to the time the interest is allowed to accrue. Income Based repayment Focused for those that demonstrate a partial financial hardship (those with a large amount of debt and little income). The monthly payments for loans under this program will be calculated based on income so that the payments are at an affordable level. After 25 years of on‐time payments in this program, the rest of the debt may be forgiven, but be careful about income level requirements in the year of scheduled forgiveness. In The event that the debt is forgiven, the amount forgiven will count as taxable income. This payment plan might be a good choice for residents or new dentists. There are certain requirements to qualify for this plan which can be found at studentaid.ed.gov. Pay as you earn A very similar program to income-based repayment except the monthly payments are slightly lower, the overall loan forgiveness comes faster, but qualifying for the program is stricter. To see how to qualify for this program, visit studentaid.ed.gov.
How Can I Prepare? | Save for future apps/exams Residency Application Cost: MATCH: ~$90 to register PASS: depends on # of schools $190 for the first school $75 for each school afterwards 10 applications = $865 (as of 2016)
How Can I Prepare? | Save for future apps/exams Budget for residency interviews Expenses: Transportation, hotel, parking, food...etc. Local Interviews: ~$50-100 Long distance: ~$1,000 When applying for residencies you must plan for travel if you are selected for an interview. Travel costs such as plane tickets, hotels, taxis, food...etc must be accounted for when saving money.
How Can I Prepare? |Save for future apps/exams Licensure costs: First take your National Boards I and II Approx $400 per exam State licensure exams Different states have different requirements Visit ASDAnet.org/licensure for specfic state requirements If you plan to practice outside of your native state budget for travel costs Retaking boards costs money
While in the Hot Seat Timely payments and forbearance Consider a financial planner Post-graduate options Utilize the tripartite ASDA resources and policies on debt These will be explained in further detail on the following slides.
While in the Hot Seat | Payments & Forbearance Pay in full and on time! Late or missed payments have a negative effect on your credit score Low credit score can hinder future loan attainment Maintain a positive relationship with your loan servicer and contact them immediately when a late payment occurs A positive relationship with your loan servicer can net you more options with repayment
While in the Hot Seat | Financial Planner We are dentists… not financial advisors Many dentists have not had formal financial education Hiring a good financial planner can save you $1,000s and many a headache Advise on investments, buying a practice, tax deductions, etc. Look for financial planners that work exclusively with dental professionals
While in the Hot Seat | Post-grad Options Goals? What kind of practice do I want? Where do I see myself in 5, 10, 15 years? Prepare my dental resume After graduation you will begin to repay your student loans. These goals are things that you need to consider and how having to pay back your student loans will affect your options when deciding your dental career’s path.
While in the Hot Seat | Tripartite Being a part of organized dentistry Networking improves your options Peer support ADA, state, and local dental association resources ADA Center for Professional Success http://success.ada.org Seek and use all resources around you. Organized dentistry has vast resources available.
While in the Hot Seat | Find a Mentor Find a mentor you can turn to for advice Don’t be afraid to have many mentors whom you can turn to when you need them Mentors may change from time to time based on your needs and goals Mentors may have personal experiences that may help guide you in your financial decision making To find a mentor, go to your local or state dental society, ASDA alumni or faculty member at your school
While in the Hot Seat| ASDA Resources Mouthing Off Blog “Money Monday” www.asdablog.com List of scholarships and repayment programs ASDAnet.org/paying-for-dental-school “Getting Through Dental School” handbook Debt 101 Guide Finding a mentor video http://youtu.be/OLyn5zbH1o0 Like emphasized earlier, be in the know about your loans and debt! There are so many resources out there to help you, including the ASDA Mouthing Off Blog’s “Money Monday” feature, ASDA’s list of scholarships and grants, ASDA Guide to Getting Through Dental School and other apps and websites.
While in the Hot Seat | ASDA Policy ASDA’s F-4 Student Debt Policy Encourages Congress and state legislatures to pass measures that include: Reduction of student loan interest rates Improved access to public service loans Loan forgiveness & scholarship opportunities for students & residents practicing in underserved areas Read the full policy at ASDAnet.org/statementsonpolicy.aspx ASDA adopted policy F-4 at the 2014 annual session.
Advocate for your future National Dental Student Lobby Day In 2014, 375 ASDA members advocated for the following bills to address the burden of student debt: Federal Student Loan Refinancing Act Student Loan Interest Deduction Act ASDA’s Council on Advocacy Email advocacy@asdanet.org to determine what you can do to advocate for your future ASDA’s legislative resources ASDAnet.org/Engage We encourage you to get involved and have a voice in this issue. Here are a few ways: Attend ASDA’s National Dental Student Lobby Day held annually in DC in the spring. ASDA provides training on the issues and how to lobby on the first day. The second day is spent meeting with legislators. Contact ASDA’s council on advocacy to learn more about the issues and what you can do as a member. Sign up for Engage to receive alerts on important bills, send letters to your representatives with a few simple clicks and read up on issues affecting your state and the profession.