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Is it best to pay off all student loans/debt before opening a practice?

I want to open up a dental practice in the future and would like advice on whether I should pay off all of my debt first or start the practice first.
#dentist
#JULY20

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Sabina’s Answer

You should see a financial advisor. My financial advisor has a student loan calculator to compare many options, and for me the option below was optimal. If your school debt is significant, perhaps the income driven program where the balance left is forgiven after 25 yrs, and you only pay tax on the amount forgiven ( as if it is income you received, thus depends on what tax bracket you will be in at that time).

I personally would not refinance with SoFi or a bank, because you will forever loose the benefits of hardship/deferral the government loans offer if you every need it.
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Axel’s Answer

Hey Kailey,

You can't go wrong paying off debt! Aside from being freed from the monthly payment, you'll save yourself thousands of dollars in interest that would otherwise be paid in the coming years.

With that being said, starting a practice is likely capital intensive and you've got a couple options to get it off the ground.

Option #1: Find a business loan with a lower interest rate than your student loans. For example, if your student loan is 7% and your local bank offers you a business loan with a 5% rate it would be advantageous to pay off the student loans with your savings and use the business loan to start the practice.

Option #2: If business loan interest rate exceed your student loan rates you may be better off using your savings to fund the capital investment for the dentist office.

It looks like many banks as well as the SBA have targeted loan programs for dental practices. Here are a couple of helpful links:

https://www.bankofamerica.com/smallbusiness/business-financing/practice-solutions/dentist-loans/
https://www.sba7a.loans/sba-7a-loans-small-business-blog/dental-offices
Thank you comment icon Thank you so much for the advice! Kailey
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