How to Pay for Dental School

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Pay for Dental School

Dental school is increasingly expensive and has a quickly diminishing Return on Investment (ROI), a topic I discussed in my previous article. But that doesn’t mean that there aren’t ways to lessen the burden of paying for your dental education. In fact, 1 out of 5 dental school graduates report having no student loan debt at all, or less than $100,000 total. In this article, I am going to talk about how to pay for dental school and how to reduce your student loan burden.

According to an American Dental Education Association (ADEA) survey conducted in 2017, the average graduating dental student had $287,331 in student loan debt. That figure includes people who have no debt at all thanks to programs I cover later in this article. More than 30% of graduates in the survey had more than $300,000 in student loan debt.

Every year dental school becomes increasingly expensive. By the time my class graduates (the class of 2020) we will have a significantly higher debt burden. Given that dental school debt increases at around 2.4% annually, it is almost certain that the national average will exceed $300,000 by then.

Take a look at our complete list of US dental schools and you will see that many schools charge more than $300,000 just in tuition alone. With cost-of-living, fees, and other expenses added in you could end up owing more than $500,000 when all is said and done!

What’s a future dentist to do?

Well, first consider your circumstances. Are you single? Do you have children? Are you an older applicant? Do you want to specialize? Would you like to work in academics or research? I will evaluate financial options based on these criteria, so think about where you are in your life and where you will be when you finish school. There are many ways to pay for dental school but they may not suit everyone.

Student Loans

Most dental students will pay for school with private and/or federal student loans. Understanding the differences between student loan options can be a daunting task.

Simply put, there are just two broad categories of student loans available: federal and private. Within each category there are various options available to borrowers which are intended to benefit the many different types of student borrowers.

Before we begin, there are a couple of buzzwords lenders use to describe student loans that you should understand.

Loan Consolidation

Loan consolidation is just a fancy way to say that you are combining multiple loans into one. There are some benefits and drawbacks to loan consolidation.

Less payments

One obvious benefit to loan consolidation is the need to make fewer payments. Most new graduates have multiple student loans they are responsible to pay back because the government lends money through different loan servicers and funds. Making only one payment is more convenient and means that borrowers are less likely to forget a payment.

Lower payments

Another advantage of loan consolidation is the borrower’s ability to extend the term of their loan to 30 years. The standard term is 10 years, meaning payments are much higher than a loan with a 30 year term. Extending the life of your loans has the advantage of reducing monthly payments, but the serious drawback of increasing the interest paid over the lifetime of the loan.

Weighted averages

Because Direct Consolidation Loans use a weighted average, there is no significant advantage to consolidating loans to achieve a lower interest rate if you plan to pay them back at the same rate. For example, two loans of $50,000 with 5% interest will consolidate to one loan of $100,000 with 7.5% interest. Either way, the interest you pay is the same.

There is one potential drawback to this loan consolidation scheme. If instead of consolidating both $50,000 loans into one $100,000 loan, we had instead paid down the more expensive 10% loan first, we could potentially save money in the long run.

Imagine for a moment if you paid down the one $50,000 loan at 10% in one year. Now you still owe $50,000 at 5% interest. However, the stock market’s ROI is typically between 7-8%, meaning that you are better off investing your money in the market and making minimum payments on the remaining $50,000 loan at 5% interest.

The anti-Ramsey repayment plan

It is generally advisable to pay down loans with the highest interest rate first. If your lowest interest loans are well below market ROIs, then you are better off investing the money. I know some famous finance gurus advise paying down your smallest loans first, but that is more psychology than good financial sense. If you are disciplined and evidence-based in your approach to finance, then pay down your high interest loans first.

Unlike the Federal Direct Consolidation Loan, some private loans do not use weighted averages, and so you could expect to achieve a much lower interest rate through a private loan consolidation in some circumstances.

One-time use

Loans may only be consolidated once, so make sure that you consolidate wisely. Be careful about consolidating fixed rate loans to variable loans. Also, early consolidation of some loans means those loans are ineligible to be consolidated with loans that are disbursed later.

For example, if Jenny has 3 student loans and consolidates them together during dental school, then she now has just one big loan. If she then maxes out her student loans to have enough liquid capital for a dental practice acquisition, she will be unable to consolidate those new loans with her earlier loan consolidation.

Loan Refinancing

When you refinance your loans, you are basically paying your old loans with a new one. Your goal is to get a better deal with a new loan, and then use that money to pay off the worse deal you are leaving behind. Many students take advantage of low interest private loans to pay down their high interest federal loans after graduation.

Combining loan refinancing with loan consolidation can be a very financially prudent decision. Going back to our example of a loan consolidation with two $50,000 loans, one at 5% interest, and the other at 10% interest, let’s now consider refinancing those loans as well.

Imagine that Bank XYZ is offering you a $100,000 loan at 3% interest to consolidate both of your $50,000 loans into one private loan. The benefits are obvious. You have a much lower interest rate on the same amount of student loans. In fact, you have effectively more than cut your interest rate in half!

Lenders who refinance dental school loans

LenderMax TermFixed APRVariable APRMax Loan Amount
SoFi20 Years3.90% – 7.80%2.51% – 7.55%No Maximum
Earnest20Years3.89% – 6.32%2.57% – 5.87%No Maximum
Common Bond20 Years3.20% – 7.25%2.70% – 7.38%No Maximum
Lend Key20Years3.15% – 8.54%2.49% – 7.90%$125k / $175k
Laurel Road20 Years3.50% – 7.02%2.80% – 6.38%No Maximum
Citizens Bank20 Years3.50% – 8.69%2.75% – 8.20%$90k / $350k
Discover Student Loans20Years5.24% – 8.24%4.87% – 8.12%$150k

Federal vs. Private Student Loans

The majority of dental student loan debt is federal student loans. But there are many types of student loans available, each with its own benefits and drawbacks. It is important to note that although private loans usually offer lower interest rates, they do not qualify for federal repayment plans such as IBR or REPAYE (both discussed below).

Federal Student Loans

Loan TypeBorrower TypeFixed Interest Rate
Direct Unsubsidized LoansGraduate or Professional6.6%
Direct PLUS LoansParents and Graduate or Professional Students7.6%

The above table shows Direct Subsidized and Unsubsidized Federal Student Loans disbursed on or after July 1, 2018 and before July 1, 2019. Graduate loans carry much higher interest rates than their undergraduate counterparts do. Direct Subsidized and Unsubsidized Loans were 4.45% in 2017.

There are many good reasons that the majority of professional students borrow federal dollars to earn their degree. Below is a list of benefits and drawbacks associated with federal student loans.

Pros of federal student loans:

  • Access to federal loan repayment and loan forgiveness programs
  • Flexible repayment plans with forbearance and deferment options available
  • No credit checks required
  • No cosigner needed to get a federal loan
  • Fixed interest rates
  • The government pays your student loan interest for subsidized loans
  • Interest is partially tax deductible
  • No prepayment penalty fee
  • Loans may be consolidated into a Direct Consolidation Loan
  • No payments required until after you graduate dental school

Cons of federal student loans:

  • Lending caps that limit how much you can borrow
  • Relatively high interest rates

Private Loans

With current interest rates on Direct Unsubsidized Loans at 6.6% and Direct PLUS Loans at 7.6% graduating dental students will be paying a lot of interest over the life of their loans. It may be in your best interest to refinance and consolidate to a more favorable interest rate.

Many private lenders are willing to refinance and consolidate your federal loans at much lower rates than you get with federal loans. DRBank for example is offering loans at 1.9% interest variable and 3.5% fixed. They claim that they save the average dental student around $30,000 in student loan interest over the life of the loan.

Private Dental Student Loan Lenders

Lender

Interest Rates

Borrowing Limits

Discover Student Loans
  • Variable rates:
    4.62% to 8.62% APR
  • Fixed rates:
    6.49% to 9.99% APR

Up to 100% of expenses covered minus all other aid

Sallie Mae
  • Variable rates:
    3.62% to 8.37% APR
  • Fixed rates:
    5.75% to 8.37% APR

Up to 100% of expenses covered

Wells Fargo
  • Variable rates:
    4.59% to 9.10% APR
  • Fixed rates:
    6.66% to 10.18% APR

The lifetime borrowing limit for this loan when combined with all other education-related debt (including federal student loans) is $120,000

Citizens Bank
  • Variable rates:
    3.53% to 9.69% APR
  • Fixed rates:
    5.26% to 10.24% APR

A variety of loans are available ranging from $1,000 up to $295,000

College Avenue
  • Variable rates:
    4.07% to 9.60% APR
  • Fixed rates:
    6.22% to 10.66% APR

Up to 100% of expenses covered

Pros of private student loans:

  • Significantly lower interest rates if you have an excellent credit history or an eligible cosigner
  • The application process and loan disbursement are often faster than federal student loans

Cons of private student loans:

  • Many require students to make payments during school
  • Variable interest rates are unpredictable and may rise as high as 18%
  • There is no subsidized option available
  • Some private loans require an established credit history or a cosigner
  • Interest is often not tax deductible
  • Borrowers do not qualify for federal repayment or forgiveness programs
  • Forbearance and deferment are rarely available

Income Based Repayment (IBR)

Any type of loan is eligible for IBR except for private loans, consolidation loans, or Grad PLUS Loans to parents. The nice thing about IBR is that your loan repayment is capped at 15% of your discretionary income. Also, during your first three years of repayment, if 15% of your income doesn’t cover the interest on the loan then the government will make up the difference.

Repayment under IBR takes 25 years which means that you will be paying off your student loans for the majority of your professional life. Unless you pay them off early that is. When 25 years are up, if you haven’t paid off your loan, then the remaining amount if written off by the government.

You aren’t off the hook though, because the IRS considers the written off debt to be taxable income. If you still owed $200,000 at the end of 25 years, then you will have to pay taxes on that $200,000 in addition to any income you earned. That can make for a big tax bill.

The scoop on IBR

  • Repayment Period: 25 years
  • Loan repayment limit: 15% of discretionary income
  • Each dependent child reduces monthly payments by about $75.
  • The government pays part of the interest during the first three years if you don’t earn enough income. That means that the principle loan amount will not increase during this time.
  • All student loans eligible except for: Grad PLUS loans made to a parent, private loans, or consolidation loans.

Pay As You Earn (PAYE)

PAYE is similar to IBR above except that repayment lasts 20 years instead of 25. Furthermore, they cap your payments at only 10% of discretionary income. This can be a good or a bad thing depending mostly on you and your situation. The longer you drag out repayment, the more you are going to pay in interest over the lifetime of the loan.

Most of the benefits are the same with PAYE as they were with IBR. The same types of student loans are eligible for PAYE that were for IBR but PAYE also allows for Direct Consolidation Loans. The government makes up the difference on interest payments your first three years if 10% of your salary doesn’t pay the interest on the loans. Also, the loan is written off at the end of 20 years which means 5 less years of interest accrual than with IBR. As with IBR though, you will be taxed on the remaining loan balance that is written off.

The scoop on PAYE

  • Repayment Period: 20 years
  • Loan repayment limit: 10% of discretionary income
  • Each dependent child reduces monthly payments by about $50.
  • The government pays part of the interest during the first three years if you don’t earn enough income. That means that the principle loan amount will not increase during this time.
  • The following student loans are eligible: Direct Subsidized Loans (undergraduates only), Direct Unsubsidized Loans, Direct PLUS Loans made to professional students, and Direct Consolidation Loans without an underlying PLUS loan made to a parent.
  • You must have taken out your student loans after September 30th, 2007.

REPAYE

REPAYE went into effect on December 16th, 2015. The Obama Administration intended to expand PAYE to people with loans dated before October of 2007. REPAYE is the result of those efforts, but it comes with one important change.

Unlike IBR and PAYE before, REPAYE does not allow you to calculate your taxes separately if you and your spouse file independently. This is bad if you have a spouse who works, does not have student loans, and they earn a relatively high income.

Don’t under any circumstances switch from IBR to REPAYE without first doing the math. The clock starts over when you do and it could cost you dearly if you were only a few years from forgiveness and now have to start all over again. Whatever decision you make be sure to do the math or work with a good accountant who can advise you.

State Loan Repayment Programs

StateProgramRequirements

Alaska

Alaska’s SHARP Program offers dentists between $35,000 and $47,000 in annual student loan repayment awards to dentists.

Dentists receiving SHARP Support-for-Service funds must commit to at least two years of service in an eligible location.

Arizona

The Arizona State Loan Repayment Program offers dentists up to $65,000 in annual student loan repayment awards for two years. Each year after results in a reduction of award funding, meaning this program is best for up to two years only.

Dentists must agree to work in a public or private non-profit facility, designated HPSA, or rural private practice in a HPSA or AzMUA that accepts Medicaid, Medicare, and qualifying health insurance marketplace plans. Recipient must be a US citizen.

California

California’s State Loan Repayment Program provides up to $50,000 in annual student loan repayment awards to dentists.

The California SLRP offers half-time and full-time service commitments. Full-time commitments require 40 hours per week and half-time commitments require 20 hours per week. Care must be provided in FQHCs or qualified SLRP practice sites. Recipient must be a US citizen.

Colorado

The Colorado Health Service Corps provides up to $90,000 in annual student loan repayment awards to dentists.

Dentists must work part-time or full-time for at least three years in an approved site and meet the hourly requirements for direct clinical contact.

Delaware

The Delaware State Loan Repayment Program provides up to $100,000 in annual student loan repayment awards to dentists.

Dentists must work full-time in a state-approved dental clinic.

Georgia

The Dentists for Rural Areas Assistance Program provides up to $25,000 in annual student loan repayment awards to dentists.

Contracts are awarded for one year and may be renewed up to three times for a maximum of four years. Recipients must serve in an underserved, rural Georgia county.

Illinois

The Illinois National Health Service Corps State Loan Repayment Program provides up to $50,000 in annual student loan repayment awards to dentists.

Recipients must be indebted to a commercial or government institution for educational expenses incurred in pursuit of applicant’s degree and be a US citizen. Must be willing to work at a public or nonprofit practice, or a private practice offering services in a federally designated HPSA for at least two years.

Iowa

The Iowa Loan Repayment Program provides up to $50,000 in loan repayment
awards for recipients who agree to a full-time commitment and less for a part-time commitment.

Two year commitment in a public or non-profit site located in a HPSA area. Full-time commitment is two years, part-time commitment may last up to four years.

Kansas

The Kansas State Loan Repayment Program provides up to $25,000 in annual student loan repayment awards to dentists.

Two years in a federally-qualified HPSA facility.

Kentucky

The Kentucky State Loan Repayment
Program
 provides $300,000 in annual student loan repayment awards to thirteen health professionals.

Two years in a federally-designated HPSA facility.

Louisiana

The Louisiana State Loan Repayment
Program
 provides up to $30,000 in annual student loan repayment awards for up to three years.

Three years in a federally-designated HPSA facility.

Maine

The Maine Dental Education Loan Repayment Program offers up to $20,000 in annual student loan repayment awards.

Two years in a federally-qualified HPSA clinic. May not be under agreement for loan repayment from a program funded by NHSC. Must work in an underserved area. Have qualifying outstanding education loans.

Maryland

The Maryland Dent-Care Loan Repayment Assistance Program provides up to $23,740 in annual student loan repayment awards.

Three years in a full-time eligible dental practice site(s). Treat a minimum of 30% MMAP recipients as proportion of total patient population.

Michigan

The Michigan
Loan Repayment Program
 provides up to $50,000 in annual loan repayment awards.

Two years in a full-time federally-qualified HPSA clinic.

Minnesota

The Minnesota State Loan Repayment Program provides up to $20,000 in annual loan repayment awards.

Two years in a federally-qualified HPSA clinic.

Missouri

The Missouri
Health Professional State Loan
Repayment Program
 provides up to $50,000 in annual loan repayment awards.

Two years in a federally-qualified HPSA clinic.

Montana

The Montana NHSC Student Loan
Repayment Program
 provides up to $15,000 in loan repayment assistance for up to two years.

Two years in a federally-qualified HPSA clinic and not currently receiving funding from NHSC.

Nebraska

The Nebraska Loan Repayment Program offers up to $20,000 in annual loan repayment awards.

Three-year commitment in an eligible shortage area.

New Hampshire

New Hampshire’s State Loan Repayment Program provides up to $75,000 in annual loan repayment awards.

Three years for full-time and two years for part-time commitments.

New Jersey

The Primary Care Practitioner Loan Redemption Program of New Jersey provides up to $30,000 in annual loan repayment awards.

Two years in an NJLRP approved placement site (maximum four years).

New Mexico

New Mexico’s Health Professional Loan Repayment Program provides up to $25,000 in annual loan repayment awards.

New Mexico residents only (12 consecutive months), employed full time, with a two-year obligation.

North Carolina

North Carolina’s Loan Repayment Program provides up to $100,000 in annual loan repayment awards.

A four-year obligation in a federally-qualified HPSA facility.

Ohio

The Ohio Dentist and Dental Hygienist
Loan Repayment Program
 provides up to $50,000 in annual loan repayment awards.

Two years in a federally qualified HPSA facility. Part-time recipients receive half the benefit that full-time recipients do.

Oklahoma

The Oklahoma Dental Loan Repayment Program provides at least $25,000 in annual loan repayment awards, more if funds appropriated by OSDH allow.

Obligations last between two and five years. Recipients may be required to teach at the University of Oklahoma College of Dentistry if positions are available, or provide dental care in a federally-designated HPSA facility.

Oregon

Oregon Partnership State Loan Repayment provides tiered loan repayment awards based on budget and the candidate’s financial need.

Two years in a federally-qualified HPSA facility.

Pennsylvania

The Pennsylvania Primary Health Care
Loan Repayment Program
 provides up to $100,000 in annual loan repayment awards.

Two years in an LRP site.

Rhode Island

The Health Professionals Loan Repayment
Program
 provides tired loan repayment awards based on budget and the candidate’s financial need.

Two years in a federally-qualified HPSA facility.

South Carolina

The Rural Dentist Loan Repayment Program provides annual loan repayment
awards to dentists who agree to work in underserved areas.

Full-time employment at a federally-qualified HPSA facility. Priority given to those who demonstrate financial need.

South Dakota

The Recruitment Assistance Program
provides loan repayment assistance equal to 200% the University of South Dakota School of Medicine’s resident tuition for the four most recently completed academic years.

Three consecutive years as a general or pediatric dentist in an eligible community.

Tennessee

The Tennessee
State Loan Repayment Program
 provides up to $50,000 in annual loan repayment awards.

Two-year obligation working full-time or part-time in a non-profit and federally-qualified HPSA facility.

Vermont

The Educational Loan Repayment for
Health Care Professionals
 provides up to $20,000 in annual loan repayment awards.

12-month and 24-month commitments available.

Virginia

The Virginia Department of Health provides up to $35,000 in annual student loan repayment awards.

Two-year commitment at an eligible practice site in a federally-designated HPSA facility.

Washington

Washington’s
Health Professionals Loan Repayment Program provides up to $75,000 in total loan repayment awards.

Three-year service obligation at 24-hours per week.

Wisconsin

Wisconsin’s Health Professions Loan Assistance Program provides up to $50,000 in annual loan repayment awards.

Three years to a minimum number of Medicaid / BadgerCare recipients (unduplicated).

Scholarships

Health Professions Scholarship Program (HPSP)

HPSP Scholarship

This is easily one of the best ways to pay for your dental education. But joining the military is not a trivial matter and it will require a great deal of sacrifice. If you aren’t interested in the military lifestyle, then you may want to look elsewhere. The HPSP scholarship is great for graduates who are single, young, and who don’t plan to specialize straight out of dental school. Do not apply for HPSP if you plan to become an orthodontist after dental school!

You can apply for an HPSP scholarship through The Navy, The Army, or The Air Force. There are many differences between the branches, but the pay and benefits are pretty much the same.

According to The Army’s website these are the benefits of the HPSP scholarship:

  • 100% of your tuition is paid. Be aware though that there are three and four year scholarships available. You will serve one year for every year of tuition your scholarship covers. For example, if you get a three year scholarship then the military will cover only three years of tuition and in return you will be on the hook for three years of service.
  • The scholarship covers books, fees, and equipment costs.
  • Sign-on bonus: In case 100% of your tuition wasn’t enough of a perk, The Army currently offers a $20,000 sign-on bonus. I couldn’t find information for signing bonuses with The Air Force or The Navy. If you have info and would like to leave a comment below please do!
  • A monthly stipend of $2,000 to help cover living expenses during dental school.
  • You are a captain (O-3) right out of dental school!
  • You will earn a $48,552 salary as an officer.
  • In addition to your base salary, you receive a housing benefit and specialty pay that takes your income somewhere north of $80,000 depending upon your service agreement and circumstances. The best part, you pay no taxes on many of the benefits!

Awesome, but what are the downsides?

Who wouldn’t sign up for HPSP given all of their amazing benefits… right? Well, I didn’t for one. I had actually planned to before I started dental school, but now I am planning to start a family and I will have my wife’s career to consider in addition to my own.

You are property of the U.S. government. The military’s needs will always come before you and your family. If your wife has a career, then she will either make the sacrifice and follow you wherever you go, or you will have to do the long-distance thing. This is why the military is such an amazing deal for young and unattached dentists but not necessarily for married mothers and fathers.

You will almost certainly deploy at some point, and depending upon the branch that may mean many months in a ship or months spent in a tent in a sweltering desert somewhere. If you don’t like to be uncomfortable, then the military is not the place for you! If you value your freedom and don’t like to be told what to do, then again, the military is probably not right for you!

Click the following links to learn more about each military branch’s HPSP scholarship application process:

The New GI Bill

US Army Salute

If you or a family member served in the United States military for at least 90 consecutive days after September 11th, 2001, then you are eligible for the Post-9/11 GI Bill (sometimes called the “New” GI Bill). Notice that I underlined family member in the previous sentence. If your parent or spouse served then they can transfer their unused GI benefit to you!

Now, the GI Bill isn’t quite as generous as the HPSP scholarship, but it is still a tremendous opportunity to significantly reduce or eliminate your tuition without having to commit to future service. Here’s a look at what the New GI Bill offers:

  • Up to 100% tuition based on the cost of a comparable state school. If you attend an expensive private school then you won’t likely get 100% tuition payment, but the military will still cover a significant portion of your tuition.
  • A stipend of $1,000 annually for books and materials.
  • Up to $2,000 towards certification exam fees or tutoring services.

If you are planning to attend a private school and are using your GI Bill benefit then look into the Yellow Ribbon Program. Some colleges and universities will pay a percentage of tuition costs above the maximum amount that the GI Bill covers. New York University is one school that participates in the Yellow Ribbon Program. If you are aware of others then please post them in the comments below!

To learn how to apply for the New GI Bill click here.

Earn a PhD and pay for dental school at the same time!

Earn a PhD

There are many DDS/PhD and DMD/PhD programs in the United States. They will typically cover all or most of your tuition expenses depending on the program. Much like the military, all they ask in return is a time commitment. Below is a list of schools that offer dual degrees:

Dual degree programs usually take seven or eight years to complete, but not always. Read the fine print and be sure that you know what you are getting yourself into. It is not uncommon for students to start their PhD with the idea that they will finish in three years and then find themselves taking a fourth or even a fifth year to complete it.

Dual degrees are a great option for dental students with families. If you are interested in dental research then they are an excellent idea. A PhD can also be helpful if you would like to work in academic dentistry someday.

What are the downsides of a PhD?

Many dual-degree students have said that you should not pursue a PhD for the free tuition. You have to be passionate about research or else you are going to regret doing it. As with the military, there are many hidden costs to getting your tuition paid for. Be sure that you are willing to pay the price before signing on the dotted line!

Also, the more time you spend working on your PhD at a lab bench, the less time you are practicing dentistry in a clinical setting. Your hand skills will inevitably deteriorate without practice.

This obviously doesn’t stop dozens of dental students from earning their PhD every year, and I am sure that they are perfectly competent dentists. But I have heard complaints from PhD graduates who said they felt like their clinical skills had atrophied.

National Health Service Corps (NHSC) Scholarship

Homeless

The NHSC scholarship is the closest civilian equivalent to the HPSP scholarship. In exchange for service in a designated underserved community (which you can choose) the NHSC scholarship will cover 100% of your tuition and fees.

In addition to the 4-year scholarship, there are 2 and 3 year scholarships available. As with HPSP, you are committed to one year of service in the NHSC program for every year of tuition you were awarded through the scholarship. Scholars from the class of 2017 must serve in clinics with an HPSA score of 17.

NHSC is a better option for most families and older applicants than HPSP is. You can choose from among hundreds of underserved locations throughout the United States. This includes many inner city clinics as well as rural and remote locations. You get similar benefits to HPSP, with the same service commitment, but you will not be deployed overseas or sent off to a war zone.

Here are a few of the benefits of the NHSC scholarship:

  • NHSC covers 100% of your tuition for every year that you commit to serve in an eligible clinic.
  • You receive a monthly stipend of $1,300 to cover living expenses.
  • NHSC covers your school fees, books, and equipment.
  • You can earn around $120,000 to start at many underserved clinics throughout the United States without having to spend any of it on your student loan repayments!

The downsides of the NHSC scholarship

Much like the military, you are giving up your freedom. You may miss out on good opportunities that come your way as you are fulfilling your service requirement. Also, you are forced to serve in less desirable communities which will often require you to live places that you wouldn’t normally want to. Finally, if your partner has a career then moving around for NHSC will could be just as problematic as it is with HPSP.

To see how to apply for the NHSC scholarship click here.

National Health Service Corps Loan Repayment Program (NHSC LRP)

This program differs from the NHSC scholarship in that you can receive the benefit only after completing dental school. To be eligible you then have to work in a qualified clinic for no less than two years. A qualified clinic has an HPSA score between 16 and 24.

Every year that you complete under NHSC LRP you are given a lump sum of up to $50,000 to put towards your student loan repayment. For a good article discussing the differences between the NHSC scholarship and LRP take a look at this White Coat Investor article written by Mike Hewlett, an NHSC scholar.

As Mike points out, the LRP is not as good of a deal as the scholarship. You are receiving a $50,000 lump sum to pay toward a loan amount that is already accruing interest. The scholarship prevents you from ever having debt in the first place, meaning there is no interest accrual. This means that $50,000 from the NHSC scholarship goes much further than $50,000 from the LRP. Besides, the NHSC scholarship offers more than $50,000 for students attending more expensive institutions. That makes it a better deal for most students attending private institutions where tuition is often much higher than that.

The upside of the LRP is that it is available for students who decide they want to take part in NHSC after they have already finished school. It isn’t a bad deal by any means, but you get the same downsides that you did with the scholarship (potential for lost opportunities and a requirement to work in a potentially undesirable location) but less of the perks.

For information on how to apply click here.

Public Service Loan Forgiveness (PSLF)

PSLF requires you to make 120 monthly payments while working at a qualified clinic. They do not have to be consecutive payments. Any outstanding loan balance is forgiven after 10 years and is tax free!!  The majority of your payments must be made under an income-driven repayment plan like those listed below:

  • Income Based Repayment (IBR)**
  • Pay As You Earn (PAYE)**
  • Revised Pay As You Earn (REPAYE)
  • Income-Contingent Repayment (ICR)

**I discuss IBR, PAYE, and REPAYE further down in this article.

As I said above, in order to qualify for PSLF you have to work at an approved clinic much like you do for NHSC LRP. The difference though is that instead of a lump sum payment of $50,000 for every year you work through the LRP program, PSLF pays you nothing. Your loans are simply forgiven much earlier than if you had just gone through any of the repayment plans listed above without participating in PSLF.

The downsides to PSLF are similar to those for NHSC. As you are required to work at an approved clinic to qualify for loan forgiveness, you may miss out on other opportunities. Also, approved clinics will likely pay less than you could earn in private practice. But tax-free loan forgiveness while pursuing an income-based repayment plan is a very good deal.

Note that receiving PSLF does not make you ineligible for participation in NHSC LRP as well. You can reduce your student loan repayment rate to 10% through PAYE with tax-free loan forgiveness 10 years down the road. If you decide on NHSC LRP or PSLF then you absolutely should consider doing both together!

For more information about PSLF click here.

Indian Health Service (IHS) Scholarship

Valley of Fire

If you are a Native American member of a recognized tribe then you should consider the IHS scholarship. Over 7,000 scholarships have been awarded so far and they cover the complete cost of tuition and any fees. In addition you are given a stipend of $1,500 per month to assist with living expenses.

After school you are required to complete a minimum two-year service commitment at an Indian health facility. The relatively short service commitment with the tremendous tuition benefit makes this one of the best scholarship options available to anyone.

If you already planned to live on reservation after graduation then this is a spectacular deal. If you are single and young, then it is still an amazing scholarship. It’s not perfect for everyone, but you would have a hard time finding a better scholarship anywhere!

If you would like to apply for the IHS scholarship then click here to apply now.

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