President’s Message: Student Debt: A National Threat

By Linda G. Levin, D.D.S., Ph.D.

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When I graduated from dental school it was not uncommon for students to have taken on debt, however student loans made it possible for many of us to afford the cost of a graduate degree. In fact, access to loans made the American Dream possible for many students from low-income families. Student loans insured that there would be dentists and physicians to serve the public, and that the best-qualified candidates would enter the field regardless of their ability to pay for professional training. In 1983, the average dental student debt was $20-30,000, which seemed like a fortune.

Today that amount is more than 10 times the 1983 figure at almost $1,000! Staggering tuition costs have created a financial nightmare for many students and for some it means not being able to follow their dreams. But the students are not the only stakeholders, as we all suffer fiscally and emotionally when the cost of a professional education becomes oppressive or prohibitive. While we are concerned about the impact on the loan recipient, the consistently high indebtedness of our new graduates also has wide-ranging effects on our economy and access to care.

The AAE Board identified student debt as one of the most important factors influencing the endodontic profession and in 2015 conducted an environmental scan on the issue. Although there are statistics for dental graduates’ student debt, less information is available for those matriculating from an advanced specialty training program. According to the American Dental Education Association, the average debt for a graduating dental school senior is $1,227. We can assume that endodontic residents take some or all of that debt load into their residency and add to it. In a 2013 AAE member needs survey, 42% of respondents out of school four years or less identified student debt as their number one concern about the specialty. Seventy percent said they had debt greater than $1,000 and 45% had debt greater than $1,000. A recent study of orthodontic residents [1] found that half of respondents had dental school debt of more than $1,000 and 32% had residency debt of over $1,000. Furthermore, 78% stated they received no stipends from their residency programs. While most began working within three months of graduation, 80% found it difficult to find ideal positions.

A recent report from the American Dental Association on the effect of debt on dentists’ career decisions stated that educational debt should have little impact unless the amount owed with interest is large relative to the expected lifetime earnings. This conclusion flies in the face of emerging data that indicate that the indebted student has fiscal and emotional issues that affect their well-being and their ability to achieve their true career dreams. Student debt has increased 66% in the past 10 years-a rate that far exceeds the increase in professional income over the same period. To state that the impact of debt dissolves away over a professional lifetime completely ignores the realities of front-loaded expenses for the new practitioner: buying a practice, buying a home and supporting a young family. No one wants to wait 20 years for financial security and the possibility of retiring debt-free is cold comfort when you are 30 years old.

Student debt is not just a problem for the individual; it has far reaching consequences. For example, there is solid proof that entering the job market with a high debt load affects the economy. Brent Ambrose and colleagues have coined a term “debt capacity” in their treatise on student indebtedness. They point out that graduates with large student loans may have exhausted their debt capacity and are less likely to start businesses of their own, purchases homes, or choose practice models or locales that may offer lower incomes. [2] In the orthodontic study cited earlier, 77% of respondents indicated they were unable to purchase a home due to student debt, 71% were unable to purchase a practice and 67% stated their debt influenced the type of practice model they entered (associate versus ownership). Other data show that the decline in new home purchases for 30-year-olds is steeper for those with a history of student loan debt. [3] Home purchases and new business start-ups are central economic indicators that affect the national economic welfare and that of every individual whether you are a student or not.

There are societal consequences from high student indebtedness as well. High student loan debt channels graduates away from lower paying jobs in education and public health, depleting those pools of crucial public healthcare servants. We must ask ourselves, are there more important jobs than educating our future professionals or taking care of disadvantaged patients? The AAE leadership has grappled with the concerns of faculty recruitment and retention in endodontic programs. It is concerning when even those who are motivated to serve as educators cannot afford to do so because their training came at such a high cost.

The high cost of a dental or medical education threatens the very fabric of healthcare. Students who are debt-adverse and do not have the resources to pay for their education may choose another profession where the training is not as expensive and the job market is strong, leading to a potential change in demographics and diversity. We want the best and the brightest to take the lead in our profession in the years to come. The ADA study noted that dental students with high debt are less likely to enter the specialties or practice in underserved areas.

Data show that the existence of high student debt can affect more than one’s bank account. A study from the University of South Carolina found that high student debt resulted in higher rates of depression, anxiety and poor health. The authors concluded, “Cumulative student loans were significantly and inversely associated with better psychological functioning.”[4] A study from Northwestern University produced the same findings and showed that higher relative debt increased diastolic blood pressure, a risk factor for hypertension and stroke.[5] The stresses of being a health care provider are high and sound mental health is a basic requirement that will be tried to its full extent on a bad day.

Your officers and Board of Directors are concerned about student debt and how it is affecting dentistry in general, and our specialty in particular. Our central goal as endodontists is to provide the best endodontic care for the public. If we allow negative external forces to mold our profession, our mission may be compromised.

How do we address student debt? Many agree that the first line of action is debt counseling for our residents. They need to know the realities of borrowing potentially high interest loans and be discouraged from borrowing money they can do without. They must understand that even loan forgiveness programs may entail a large tax penalty; a forgiven loan is considered income and as such, is taxable. We must caution students that extending repayment can actually cost more in the long run. In the article by Pruzansky et al., they advocate for stronger practice management seminars within every residency with emphasis on employment choices, contracts and financing. They also suggest continuing education courses that focus on financial planning with segments on loan management.

On the advocacy front, we must push for lower interest rates on student loans, provisions that allow for refinancing or consolidation of loans and loan forgiveness if the recipients work in underserved areas. We need to demand that the same consumer protection provisions available to every other industry protect student loan borrowers. Presently private and federal student loans do not qualify for bankruptcy protection, for example. We must support initiatives to partner with financial institutions that will refinance loans to take advantage of lower interest rates. As dental professionals, we must continue to support legislation that funnels more money into dental schools so that unreasonable tuition costs can be offset. Through its commitment to ADPAC and ADA Engage, the AAE supports ongoing efforts in Washington to enact these provisions and related legislation.

The ADA offers resources for dental students and new graduates to aid in financial planning and endorses Darien Rowayton Bank’s student loan consolidation/refinancing program, which helps ADA members get lower rates without application, origination or prepayment fees.

Complacency comes with a high price, so we cannot afford to do nothing. Rae Gomes in his article on 5 Ways Young Americans Can Fight Back Against Student Loan Debt notes, “It’s easy to get overwhelmed in a world that counts on it.”[6] Let’s strive to be heard, and not take the easy way out!

1. Pruzansky DP, Ellis B, Park JH. Management and Marketing influence of student-loan debt on orthodontic residents and recent graduates. J Clin Ortho 50(1):23-32.

2. Ambrose, BW, Cordell, L, Ma S. The Impact of Student Loan Debt on Small Business Formation (July 15, 2015). https://ssrn.com/abstract=2417676

3. Korkki, P. The Ripple Effects of Rising Student Debt. The New York Times, May 24, 2014.

4. Walsemann KM, Gee GC, Gentile D. Sick of our loans: Student borrowing and the mental health of young adults in the United States. Social Science & Med 124:85-93.

5. Sweet E, Nandi A, Adam E, McDade TW. The high price of debt: Household financial debt and its impact on mental and physical health. Social Sci & Med 91:94-100.

6. Gomes, R. Five Ways Young Americans Can Fight Back Against Student Debt. The Nation. September 276, 2011. https://www.thenation.com/article/five-ways-young-americans-can-fight-back-against-student-loan-debt/