President Joe Biden recently announced his plan to forgive up to $20,000 in student loan debt to eligible borrowers, but some dentists are not confident it will do much to help aspiring and current dentists.
The plan lists several initiatives to lower student loan debt, including canceling up to $20,000 in debt to Pell Grant recipients and up to $10,000 to non-Pell Grant recipients. Eligible borrowers include those with individual income less than $125,000 or married couples with income less than $250,000.
Additionally, federal student loan repayments are paused through Dec. 31 and the Department of Education is proposing to cap monthly payments for undergraduate loans at 5 percent of a borrower's discretionary income and provide additional loan forgiveness to those who have worked at a nonprofit organization; in the military; or in federal, state, tribal or local government. The plan also includes an initiative to protect future students by reducing the cost of college.
Here, seven dentists share with Becker's their thoughts on the plan and the effect it will have on the dental industry:
Editor's note: Responses were lightly edited for clarity and length.
Hisham Barakat, DDS. Chief Clinical Officer at Guardian Dentistry Partners (Miami): As the chief clinical officer for 145-location DSO, we come across dentists from all walks of life. They graduate from dental schools with fairly sizable student debt, ranging from $200,000 to $600,000. [The student loan plan] will make a very small dent to the fairly sizable loan they graduate with. It would have been a whole lot better if they would have helped students get a lower-interest loan instead of these high-interest student loans and will save them in the long run a lot more than $10,000 to $20,000.
Joshua Bronner, DDS. Director of Clinical Compliance at Select Dental Management (Florham Park, N.J.): It's tough to say since the plan doesn't actually help all practicing dentists. It's a mixed bag and regardless of success in the field, full-time, single dentists that still hold student loans likely will not benefit as the forgiveness level falls below the average dental salary in every state. In addition, many families will also fall below the family-level threshold for forgiveness, whether or not their spouses have incomes. The high-interest student loans and rising debt-to-income ratio for new and younger dentists are also proving to be increasingly burdensome on the professional and personal growth of hardworking dentists that are in offices everyday treating patients in America. To finish my rant, I must not leave out the rising overhead and supply costs in conjunction with stagnant and rather menial insurance reimbursement rates that practice owners must navigate through while maintaining their desired quality of patient care.
Jonathan Kuipers, DDS. North Garland (Texas) Dental and Orthodontics: Initially, student debt was taken out and exchanged for something of value (education). The holder of the debt expected to be paid back with interest in the U.S. dollar, which then can be used to purchase real things. This repayment then has value. So if Joe Biden forgives debt, and this debt is already owned by the U.S. government, this forgiveness is the same thing as repayment.
Where does this value for the repayment come from? And it's very simple. Since there isn't a corresponding tax increase, this value must come from deficit spending which then is monetized by the Federal Reserve. This is dilution of the currency. Debasement if you will.
So to answer your question, debt forgiveness will definitely benefit the dentist or dental student. But the saver, the frugal pensioner, the endowment with a large U.S. dollar bond portfolio, the owner of certificates of deposit at the bank — these are the individuals who will pay for this forgiveness and who will lose.
Jonathan Lovell, DMD. Superstition Mountain Dental (Gold Canyon, Ariz.): They are just putting a Band-Aid on the real problem: out of control costs for education. The minute the government guarantees the loans, schools will raise the prices as high as they can. Make the school guarantee the loans and that will change everything.
Rajdeep Randhawa, DDS. Innovative Dentistry (Colts Neck, N.J.): Student loan forgiveness is miniscule as compared to the total debt load dental professionals and dental students are holding, and the way it will be distributed is not clarified yet. We will have to see in the future if it will make any difference. Dentistry, unlike other professions, has the highest cost of education, establishing dental offices is expensive and running dental offices involves very high overheads. When you compare top-notch dental schools, medical schools, law schools and business schools in terms of the cost involved, business school professionals have the highest rate of return and dentistry has the lowest rate. Dental schools have the highest cost of attendance, followed by a very high cost of establishing and running a dental office.
The huge debt load incapacitates dental students and professionals from starting a solo practice after graduation due to intense competition in highly saturated areas. The only option for many is to join as associates and employees. With DSOs recruiting them from college campuses, many of them get into even more debt joining DSOs by working long hours [and] getting a small percentage of their production with a major part of their compensation going into paying student loans when they get their salary after taxes. They give the best five to 15 years of their life paying their enormous loans with many delaying family, buying homes and investing in themselves and their future. Due to debt load, many graduating dental professionals do not want to take any more loans to buy dental practices or start new practices, dampening the dental practice market and leaving a gaping hole for private equity-supported DSOs to gain ground and grow aggressively in areas they had not ventured into yet.
Douglas Solow, DDS. Associate Dean of Clinical Affairs and Director at University of Southern California Herman Ostrow School of Dentistry (Lost Angeles): A $10,000 write off for a dentist with hundreds of thousands of dollars of debt is hardly impactful. Moreover, this does nothing for those who are in school now or will be in the future.
Blake Westra, DMD. Charleston (Ill.) Family Dental: Unfortunately, the president's plan does little to nothing to help offset rapidly expanding dental student loans. This will do very little, if anything, to combat the financial burden of student loans for new and existing dentists and will continue the trend to new dentists not transitioning to ownership. Often people look at the salary of a dentist and think they don't need help with their student loans. The average student loan debt is $37,000 to $40,000 with the average starting salary of someone with a bachelor's degree being [about] $60,000. That results in a student loan-to-income ratio that is still favorable. For dentists, the average student loan amount is $300,000 with the average salary of a dentist being $150,000. That results in a very poor student loan-to-salary ratio. Add in taxes for those in the higher tax brackets and the resulting personal financial outlook of a newer dentist is shrinking.