How Dental School Debt Can Work in Your Favor (Yes, Really)

How Dental School Debt Can Work in Your Favor (Yes, Really)

Let’s be real—dental school debt can feel like a 500-pound weight strapped to your career. If you're an associate right now, chances are you're carrying a six-figure burden and wondering if that dream of owning your own practice is even realistic.

But here’s something most dentists don’t hear enough: your dental school debt can actually help you become a practice owner.

No, that’s not a typo. Let’s dig into why this paste—your student loan paste—might just be one of your best assets.

The Surprising Truth: Banks Like Your Debt (Sometimes)

Not all debt is created equal. In the world of lending, there's bad debt (think credit cards and car loans) and good debt. And dental school debt? That’s firmly in the “good debt” category—as long as you manage it right.

Banks who specialize in dental lending understand that school loans are part of the deal. They expect it. In fact, lenders are far more concerned with whether you have liquid savings than whether you’ve paid off your student loans.

In other words, having $300,000 in school debt with cash in the bank is better than being debt-free with an empty account.

Why Paying Down Student Loans Can Hurt Your Chances

I know it feels good to knock down that balance. You’ve been told your whole life that being debt-free is the goal. But if you plan on owning a practice in the next few years, that strategy could backfire.

Let me break it down with a real-world example:

Associate A vs. Associate B

• Associate A has $350,000 in dental school debt. They make their minimum payments and save aggressively.

• Associate B worked overtime to pay off their loans—but now has no savings.

Both apply for a practice loan.

Who does the bank favor?

Associate A.

Why? Because they have cash reserves. Banks don’t love zero-debt associates nearly as much as they love liquidity. They want to know you have the financial cushion to weather those early months of ownership—and your savings prove it.

What the Banks Are Really Looking For

Here's what lenders like to see from future practice owners:

• You’ve consistently made on-time payments on your student loans

• You haven’t drained your accounts trying to pay them off

• You have a solid plan and the discipline to back it up

Good debt, managed well, signals responsibility. Bad debt—especially high-interest consumer debt—sends the opposite message. So yes, it’s okay to keep your student loans for now. Just don’t carry credit card balances if you can avoid it.

Here’s the Strategy: Save Cash, Not Your Pride

It's not about bragging rights for having zero debt. It's about creating a financial profile that banks trust.

That means:

• Make your minimum loan payments on time, every time

• Avoid refinancing that increases your monthly payments

• Save aggressively to build a cushion the bank can see

Remember This: Your Practice Loan Is the Goal

With the right startup plan, your new practice can be profitable within months. In fact, many of our clients see income in month one. And the paste (that debt again) you’ve been worrying about? It won't stop you from getting funded—it might actually get you approved faster if you're smart with your savings.

Quick Tips to Strengthen Your Loan Application

• Prioritize liquid savings over early debt payoff

• Keep consumer debt (credit cards, car loans) as low as possible

• Maintain good credit by managing utilization and making timely payments

Don’t Let the Wrong Advice Delay Your Dream

There’s a lot of noise out there. Social media, forums, and well-meaning friends may tell you to get debt-free before opening a practice. But unless they’ve opened hundreds of practices, that advice might be well-intentioned—but off-base.

Your dental school debt isn’t the roadblock. The real barrier is a lack of the right strategy.

Final Word: Good Debt Is Just Paste

Think of your student loans as paste—messy, sticky, but essential for building something permanent. You wouldn't try to build a practice with no foundation. And you shouldn't build your financial profile on zero-debt pride if it means emptying your reserves.

Make your payments. Keep your savings strong. And when the time comes, walk into that bank with confidence—and a plan.

Want to Learn More?

If you're an associate who dreams of practice ownership, check out our free training: the 13 stages to launching a successful dental startup. It's built for associates like you who want to do this the right way, the first time.

www.idealpractices.com/13

You’ve got what it takes. Let’s get your plan in place.

– Stephen Trutter
President, Ideal Practices