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Dental Student Debt – The #2 Reason For Optimism

By Jayme Amos.  Get free updates of posts here

Dental Student Debt
The #2 Reason For Optimism is…

As counter-intuitive as it may sound, I’m here to tell you that your Dental Student Debt is good news because it’s actually good and profitable for you…

In our last 2 articles, we explored why you may start your career with a Negative $1 Million Net-Worth and we also looked at a 6-Figure Reason for Optimism.

Dental Student DebtNow, we’ll dig into possible benefits of Dental Student Debt and the hard truths behind whether or not you’ll see any profits from that debt.

Our culture generally has a negative opinion of debt, and I’m about to tell you some things that might sound a little backwards.

I may not end up with a lot of friends in the consumer lending world after going through this next topic but here is the way I look at it…

Business Debt: Good
Personal Debt: Bad

That sums up all the debt advice in the world.  Why?

Business debt enables you to earn money.

Personal debt costs you money.

What I’m about to do is tell you why the $620,000 of “Dental Student Debt” (from my previous article “The Good News About Dental Debt: 2 Reasons for Optimism is good for you…

In its simplest form, “Dental Student Debt” versus “personal debt” looks like this:

Example #1: $620,000 of “Dental Student Debt” enables you to EARN an income of about $262,500 per year*

Example #2: $620,000 of car, house and credit card debt will COST you about $60,000 per year. ($530k mortgage for 30yr and $60k of 5 year car loans and $30k of credit card debt)

Did you catch the important major difference?


Would you prefer to EARN $262,500 per year?

Or would you like to incur a COST of $60,000 per year?

Business debt can EARN your money.
Personal debt will COST you money.

This subtle difference in your financial mindset will be the primary difference between your long term wealth or poverty.

Average Income for An Owner-Dentist:  The ADA reports the average owner-Dentist’s income to be $200,000  but that number is much lower than the proper calculation of true practice-owner income for this conversation. The proper calculation should show all available profit from the practice after paying expenses.

The Academy of Dental CPAs generally targets expenses for the average practice to be 60%-65% of collections. This shows that the average practice owner will have profits of 35%-40% of revenues available to pay debt, personal income, retirement and personal expenses.

By multiplying the average practice revenue in America of $750,000 by 35%, we arrive at an average practice-owner’s earnings of $262,500. That amount is the entire amount that the dentist has remaining after paying all practice expenses.

So the question becomes this…dental student debt

Will your Dental Student Debt EARN you money or COST you money?

Most younger dentists openly discuss the fear and discomfort that goes along with all their Dental Student Debt. And I can’t blame them – 6-figure and 7-figure debt loads are scary.  Frankly, debt like that can be disastrous if not handled properly.

If you’re anything like those doctors, all that debt probably feels like a weight hanging around your neck but it’s actually the most empowering million dollar loan available!

This is the big difference and benefit of your Dental Student Debt that I hope to convey.

This is the difference that will turn a stomach sick from Dental Student Debt into a feeling of empowerment and opportunity.

Your Dental Student Debt should be the envy of everyone in your community!

It’s only because of your Dental Student Debt that you have the opportunity to impact patient’s health, their lives and make a wonderful, profitable, flexible living.

I hope I can convince you that the weight of Dental Student Debt is actually your secret weapon toward professional fulfillment and long term wealth.

Consider a few realities with me:

a)      There are few professions that can boast an average annual income of $262,500 per year but with your “Dental Student Debt”, you’re able to earn that much and more.

b)      Were you to start a pizza shop or a book store or any other small business, you would be highly unlikely to get approved for a large loan from the bank primarily because…

c)       Dentists have one of the lowest rates of failure for small businesses (only 1% fail according to numerous Dental Economics articles).

That last bullet point is the power shot!

dental student debtEven though anxiety about dental student debt is valid, your profession is stable and your chances of success are very, very high. While success is never guaranteed, the failure rate of dentists is so low that most banks would LOVE to work with you (but PLEASE choose your bank carefully and watch our website for blog posts on choosing the right dental bank at

Remember, your Dental Student Debt is far, far different from the personal debt of houses, boats and cars. Those personal debts COST your money.

Your Dental Student Debt is business debt.


Business debt enables you to EARN money.

Business Debt: Good.

Personal Debt: Bad.


How Would Other Businesses Handle Debt Like Yours?

Another way to ask the question is, is your “Dental Student Debt” equivalent to a start-up business loan?

Yes. Even though the loan you have will include your education loans, your Dental Student Debt is very much like a start-up business loan.

What do other non-dental businesses do as they pursue growth? Most small businesses will expand through a loan. They’ll expand with the power of debt – and that’s a good thing! They’ll use debt to the business’s advantage to offer mores services, bring on more customers and create more profits.

For a dentist, specifically, a loan for a practice (start-up or existing) is used for the purposes of expanding clinical service offerings. This means you’re taking out a loan for the purpose of doing more business.

Therefore, your Dental Student Debt, if approached like a business debt and used wisely can lead to more income (ie, more patients and more clinical services).

If those debts are managed properly you’ll create more profits.  Good, profit-making dental student debtbusiness debt. Not luxury car personal debt.

For example:

Take on debt to become a dentist and you have potential to earn higher income.

Take on debt to buy a practice and you have potential to make more income.

Take on debt to equip an empty operatory and you can have an emergency overflow room to do more procedures.

Take on debt to buy a sports car – no new income. Don’t take on debt for personal items!!

Breaking Down the Monthly “Costs” of Dental Debt

This is how we can dissect the cost of the good Dental Student Debt. We’ll use numbers that are generally accepted as current industry averages:

$220k in Educational Debt (See article on Educational Debt)

$400k in Practice Debt (See article on Practice Debt)


$620,000 in total debt


Estimated Monthly Loan Payment:  Click Here to Check Out The Math


Those calculations show simply that your monthly “cost” to graduate and own your own practice are approximately $5,660.


Now, let’s pretend you were just approved for a loan for your new facility from a good dental bank. Any good “dental bank” worth their salt will examine your books, your production and your current facility. If you’re applying for a start-up practice loan and your bank works with a group like mine, the bank will also consider demographics, local competition and marketing opportunities to see if you’re capable to turn a higher profit after signing for their loan. (See our article on demographics)


In other words, the banks are asking the same 2 questions you should be asking:


1)      Will this loan make the practice more productive and profitable?

2)      Will the practice generate enough new revenue to pay back the loan?


So this question is the most important of all: 


Will your Dental Student Debt enable you to PROFITABLY
afford paying $5,660 per month?

The other way to ask this all-important question is, “will I earn more income as a result of paying this $5,660 loan payment?”

I’ll create some answers to those questions right now:

Annually, payments of that amount equal almost $70,000.

Let’s work with this amount below to determine if you will earn enough income while making that level of large loan payments.

This is where the issues of Business Debt and Personal Debt make us face some hard choices.

Can you afford $70,000 in loan payment each year?


$5,660 per month is a large number but it is a realistically affordable amount.


dental student debt

This is the math on affording $5,660 per month…

Average annual income of a practice owner: $262,500

Taxes (assuming 30%) = $78,750

Leaving you: $183,750


If we subtract the $70,000 of debt payments from the $183,750 of after-tax income, you will be left with a disposable income amount of $113,750 annually.

So, after you pay taxes and your debt payments, you’ll have $113,750 to live on.

$113,750 to pay for home, food and car might not be the image of flamboyant wealth that society might associate with doctors today. But $113,750 is absolutely an amount you can live on and save for your future with. Additionally, as you grow your practice and learn ways to keep costs down, you’ll be able to raise your income substantially.

You’ll have a truly disposable income of approximately $113,750, pay off your dental student debt AND own your own practice, giving you complete clinical autonomy.

Many clients of mine look at this math and finally understand it and feel empowered. Its the empowerment of clinical autonomy – the freedmon and ability to treatment plan on your terms. The freedom and ability to lead a team to care for patients the way you feel is right.

Some would say the freedom to practice dentistry on their own terms is the dream they’ve been pursuing since they were a child.  Click here to view a real life story of a dream coming true.


A Lifestyle Perspective?


If you choose to pursue practice ownership, you will need to sacrifice $70,000 of annual spending on other things.

Why? Remember the $70,000 in annual loan payments from above?

If you choose the freedom granted through practice ownership, you’ll likely be paying that loan, each month. That’s the tradeoff.

You’ll be spending $70,000 on building your practice equity and enabling you to live a life with total clinical autonomy.

Boats, lavish vacations, cars, TV’s and big homes will need to be postponed or sacrificed as a result of redirecting that income to debt payments. This will inevitably cramp the style of those who want the “image” of wealth for many years – a sacrifice that may extend for 15 years. And below, we’ll talk about the trade-off and pay-off.

Which will you choose?
Business Debt or Personal Debt?

A Hidden Benefit: Paying Off Your Practice

Don’t forget about the hidden benefit with a long term payoff in the scenario above. The power of paying off the loan on your practice has huge long term financial benefits to you. During those 15 years of repaying debt, you’ll be earning equity in your practice.

At the end of your loan, you’ll then have a practice that has a value. A practice that you could sell as a part of your retirement plan.

Many practice owners are finding their practice to be worth $500,000-$1,000,000 when dental student debtthey sell. Just imagine the opportunity and relief you’ll be able to rest on when you near retirement and have a large asset like that which you can sell and add to your retirement planning.

By going down the path of practice ownership, you’re enabling yourself to practice on your terms, on your turf, in your own facility. Your ability to enjoy all of that clinical and personal autonomy isn’t quite as attractive if you don’t own your practice.

It’s a complicated choice but it’s a choice that leaves you with some very good options.

Are there challenges? Certainly.

Is there a clear path to success that many other dentists have forged before you?

You better believe it.

There is a way to make practice ownership work….If you want it.

If you’re like most people, you’ll need some business debt to get through your education and into practice ownership. But through that path, you’ll have many fulfilling opportunities and, if you choose to pay down your dental student debt appropriately, you’ll have an enjoyable lifestyle and retirement too.

And the point of all this is that your Dental Student Debt, if used wisely, is a good thing!

To summarize, your Dental Student Debt is all of these things…

–          It’s “good debt” if used wisely like a start-up business loan, for business growth.

–          It enters you into practice ownership where you determine your clinical standards              of care.

–          It gets paid down, leaving you with a valuable practice to sell at retirement.

–          It empowers you to start a business that has a 99% success rate!

–          It comes with a catch…you must sacrifice some expensive lifestyle choices.

–          It enables you to enter into one of the most highly desired professions in our                            country.

Most of the industry veterans who have owned their own practices say it’s well worth the sacrifice.

It’s a choice every dentist must make.

dental student debt


Which path will you choose?

Our 4th and final article in this series will show laser-targeted action items that will make all the dental student debt work in your favor.


There are 4 inevitable debt stages in your career as a Practice Owner:

  1.  Building up Debt for Education (From our 1st article)
  2.  Building up Debt for Practice Ownership (From our 2nd article)
  3.  Paying off the Debt  (Good, Profitable debt from this article)
  4.  Building Massive Wealth – A Long Term Perspective and Making the Profits work      FOR  YOU. 

Don’t miss the 4th and final article in this series!

The uncommon perspective’s you’ll discover in the 4th article will show you how to avoid missing long term wealth opportunity as a practice owner. You’ll discover techniques most dentists don’t know, turning an average dental income into above-average net-worth.

For that article, I defer to Jared Thompson, Founder of Personal CFO (

Personal CFO works exclusively with Dentists to create high-net worth individuals.

From Jared, you’ll learn tools and dental-practice financial techniques that have proven themselves over and over. You won’t want to miss it if you want to pay off that dental student debt and have plenty left over for yourself while you’re paying back your loans!

And the best news is that these tools work for the recent grads just as well as the seasoned vets.

I hope you’ve gotten some great ideas and perspective on this topic and I’m sure you’ll find some great wealth building ideas in the next article.

See you next week!

By Jayme



Jayme Amos

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