While becoming a Dentist is a solid career path, the education required to become a dentist is not cheap. The average student loan debt for all indebted dental school graduates in 2018 was $285,184, according to the American Student Dental Association.
When borrowing so much, it is inevitable that students will exhaust federal student loans and still need additional sources of funding—which is where private student loans come in.
Dental students should always max out federal student loans first because of the borrower protections they provide. Then, they should shop around carefully to find the most affordable private student loans to cover the rest of their educational costs. This guide will help you to learn about dental school loans and will give you some tips on the best lenders to consider as you find private loans to fund your education.
Federal Student Loans for Dental School
First and foremost, you should always take out federal student loans from the Department of Education before obtaining any private loans. Federal loans have low fixed interest rates; they provide much more flexibility in terms of deferment and forbearance options as well as repayment plans; and they even offer the opportunity for loan forgiveness. Private lenders don’t offer these benefits.
There are three different types of federal loans you should look into, including:
Federal Direct Unsubsidized Loans
Federal direct unsubsidized loans are available to both undergraduates and graduate or professional students, regardless of financial need. The amount available to borrow is determined based on your school’s certified cost of attendance minus any other financial aid you are eligible to receive. There are also annual and lifetime maximums to be aware of.
Here are some of the key features of Direct Unsubsidized Loans:
- Independent graduate or professional students can borrow a maximum of $20,500 per year and can borrow a total of $138,500 in combined Subsidized and Unsubsidized federal student loans. No more than $65,500of this aggregated combined limit can be in subsidized loans.
- The current interest rate on Direct Unsubsidized Loans for graduate and professional students is 6.08% for loans disbursed on or after July 1, 2019, and before July 1, 2020.
- Loan fees are 1.059% for Direct Unsubsidized Loans disbursed on or after October 1, 2019, and before October 1, 2020.
2. Federal Grad PLUS Loans
Federal PLUS Loans for graduate and professional students are available to graduate students who do not have an adverse credit history. You must be enrolled at least half-time at an eligible school.
Some of the key things to know about Grad PLUS Loans include the following:
- The maximum PLUS loan amount you can borrow is the school-certified cost of attendance as determined by your school minus any other financial aid available to you.
- The interest rate on Direct PLUS Loans disbursed on or after July 1, 2019, but before July 1, 2020, is 7.08%.
- There is a loan fee of 4.236% for loans disbursed on or after October 1, 2019, and before October 1, 2020.
3. HRSA Loans
These loans come from the Health Resources & Services Administration. HRSA offers two different kinds of loans that could be used to pay for dental school:
- Loans for Disadvantaged Students
- Health Professions Student Loans
Both of these loans are low-interest loans available to students from a disadvantaged or low-income background who are enrolled at least half-time in a qualifying dentistry program.
Benefits of Private Loans for Dental School
There are some benefits of taking out private loans for dental school, including the following:
- You can obtain additional funding you need. You may be able to obtain more money from a private lender than you could through federal student loans.
- Many lenders charge no loan origination fees. Federal loans, on the other hand, do charge a fee to originate your loans.
- You have a choice of lenders. You have a lot more flexibility in picking who provides your private student loan than when you get federal loans through the Department of Education.
- You can choose a fixed or variable interest rate loan. Federal loans only offer fixed-rate loans. Variable-rate loans often start with a lower interest rate, although it is possible the rate and payments will go up over time.
Downsides of Private Loans for Dental School
There are also some downsides of taking out private student loans for dental school, including:
- You will likely pay more interest. Rates on private loans tend to be higher than the rates on federal student loans.
- You don’t have as much flexibility in loan repayment. Your repayment schedule and monthly payment is determined by your lender and you can’t change it, unlike with federal student loans. There are also fewer options for putting loans into forbearance or deferment and you can’t choose income-driven payment plans.
- You can’t get loans forgiven: While federal student loans offer Public Service Loan Forgiveness to forgive a portion of your loans if you do qualifying public service work, private student loans do not offer any kind of forgiveness.