DON’T Pay Off Your Student Loans…Yet

I was asked recently for my number one financial tip for new dentists. This happens often because I’m an accountant by training and have seen the differences (and the net worths) of a lot of dentists in every stage of their careers.

These days, the questioner is asking because he or she wants to own a practice one day, and they know they need to save up some cash, but they’re also concerned about their crushing student loans.

So when I get this question these days, I’m ready. My number one financial tip for new dentists can be summed up in one word:


It’s one word, but it means a couple of different things.

WAIT to be “rich.”

You’re fresh out of dental school, you’ve got six figures of student loan debt (and the first digit doesn’t even have the decency to be a “1”), and you land your first job, maybe as an employee, maybe as an associate.

Now, instead of racking up debt, you’ve got an income. And wow, what an income. The average associate I see is usually making in the neighborhood of $175K a year. That’s not bad! But that’s not what you graduated for.

The average practice owner is making close to double that amount. Now that’s some income. But because you’re making more money than you ever have, the temptation is to live like you’re rich. Buy the Tesla! Get the big house! Go for it!

Not yet.

Delayed gratification is one of the not-so-secret ingredients to a financially successful life. But delayed gratification isn’t just about the delay. The key word there is gratification! You’ll get there! You’ve worked hard to get into a career that would take care of you financially for the long haul.

Which brings me to my next point:

WAIT to pay off your loans.

This one is counterintuitive, I know. “If I put my extra $5K this month toward my loan, I’ll pay it off faster!” Not quite.

Most dentists who pay off their loan on an associate’s salary take about 12 years to do it. On an owner’s salary, though, the average I see is about seven years or even less.

This means you should prioritize saving up to buy a great practice. To buy a decent practice, you’ll need a cash reserve of at least $50K (these days it’s usually more). So you take that extra $5K that would have gone toward your student loan, and put it away for that practice purchase.

Do that for a year or two and you’ve got enough to make that purchase, get that owner’s salary coming in, and pay off your loans faster than you would have as an associate.

And hey, if you do all that and still have some left over, by all means make some extra loan payments! But prioritize your long-term financial health by getting to practice ownership as quickly as possible.

You’re a dentist, which means you went through an ungodly amount of school, so I know that you know how to take the long view on something. Keep that up! Wait just a little longer to get out from under your student loans, wait a little longer to live the wealthy lifestyle you’re looking forward to, and you’ll eventually be able to live that way more and longer than you ever thought possible.