Year-End Considerations for New Dentists
The impact of COVID-19 has created a myriad of opportunities for dentists to position themselves for success in the coming years. Among them is the favorable situation regarding managing student loan debt. Below are the key takeaways:
- Continue to take advantage of federal student loan relief as long as it is available. The extension of the federal student loan payment deferral program through December 31, 2020 means that loan payments are deferred and additional interest is not accrued on your federal student loan balance until January 1, 2021. Considering the lack of interest accrual or payment requirements, you should wait to refinance your federal student loans to be sure you do not miss out on any further relief.
- For dentists with private student loans, consider refinancing your loans to take advantage of historically low interest rates. You can minimize interest by accelerating your repayment, or lock in the low rate over a longer term (10 or 15 years) to help with current liquidity.
- Consider acquiring a practice. As a result of COVID-19, more dentists have opted to accelerate their retirement and sell their practice, effectively increasing the supply of available practices. Owning your own practice not only increases your cash flow for repaying your student loans, but it also provides the advantage of growing your wealth by establishing a retirement plan for your practice.
To discuss how to best manage your student loans and how to leverage other cash flow opportunities, you should consult with your dental advisor further.