How I stopped drowning in student loan debt

May 19, 2016
David Manzanares, DDS, FAGD, explains how Darien Rowayton Bank's student loan refinancing program, which is endorsed by the American Dental Association, helped him to stop struggling with his student loan debt.
David Manzanares, DDS, FAGD, explains how Darien Rowayton Bank's student loan refinancing program, which is endorsed by the American Dental Association, helped him to stop struggling with his student loan debt.

This is my debt story: My experience with student debt is a story that almost all new dentists today know well. I graduated from the University of Missouri-Kansas City (UMKC) School of Dentistry in 2009 with $220,000 in student loans. I consolidated my loans after my first year of dental school when the government was ending the practice of in-school loan consolidation, and I was able to lock in $50,000 at 4.75%. The rest of my loans were at an interest rate of 6.8%. However, I felt pretty lucky since I graduated from undergrad with no student debt because I had a full-tuition scholarship. In comparison, many of my classmates owed tens of thousands of dollars from undergrad in addition to their dental school debt.

After graduation, I went to work at a Federal Qualified Health Center (FQHC) in southern New Mexico. While I was earning a respectable starting salary, I found that I had to moonlight to make ends meet. Initially, my loans were on the 10-year "standard" repayment plan. I had a monthly payment of more than $3,000. After a few months of barely managing to make ends meet, I made the switch to an income-based repayment plan. My monthly payments were more manageable, but that lengthened my repayment period to 25 years.

One of the reasons why I started working at an FQHC is because it allowed me to qualify for some of the loan repayment programs offered by the state and federal governments. Unfortunately, many of the federal programs have cut back on their levels of reimbursement or on the number of people that they accept into the program. Several state programs have strict terms for the FQHCs, and ultimately, I decided that the repayment program was not the right fit for me.

After a few years, I found work closer to home in the Albuquerque area. After I became settled about two years ago, I purchased a house in Albuquerque. To facilitate my ability to obtain a reasonable mortgage, my banker advised me to pursue a repayment plan for my student loans that was spread out over 30 years, which would lower my debt-to-income ratio. My payments shrank to $1,600 a month; however, I tried to pay back more than that to pay it off faster. Over the past two years, I paid nearly $48,000 to the loan company, of which nearly $36,000 alone went to interest on the loans.

Writing that check every month, knowing that the vast majority of it would be going to interest and not the principal, was emotionally devastating. The thought of continuing that pattern for most of my professional life, or at least the next 30 years of it, was incredibly discouraging.

Impact of student loan debt

I have held off on the purchase of a practice due to the amount of student loan debt that I have. I have been very aggressive in pursuing continuing education primarily because it is tax-deductible, whereas student loan interest is not. In many ways, my debt stunted the development of my professional life; I truly wondered if I would be able to achieve the same financial successes that my father did after he graduated from dental school 36 years ago. Graduating in the height of the Great Recession did not help my situation, and many classmates have told me about the challenges that they encountered with a six-figure student debt load. I realize that I have it much easier, as a public school graduate, than many of the private school graduates who owe twice as much as I do. I also recognize that, as a single man, a hefty debt load has less of a financial impact for me than for dentists who are married with children.

A solution

As soon as I heard about the opportunity to refinance my student loans through Darien Rowayton Bank (DRB), I was very excited. Truth be told, I did not know that refinancing student loans to a lower interest rate was even possible. Over the previous several months, I had received offers from different companies about refinancing options (I was receiving them as often as credit card applications), but I hadn't heard anything about these companies. I was cautious, not wanting to fall victim to some sort of scam. When I saw that this program was endorsed by the American Dental Association (ADA), knowing how thorough their research is, I felt confident that this was a legitimate offer.

I filled out the paperwork and went through the application process. The application was fairly straightforward. The initial monthly payment that I was quoted was approximately $1,750 a month. This was done by lowering my interest rate to 4.75% from 6.8% (for all of the loans), and more importantly, this reduced my repayment plan to 10 years instead of 30.

After speaking to DRB's customer service, I was informed that I would have an additional .25% reduction in my interest rate for being an ADA member, as well as an opportunity to seek another .25% reduction in my interest rate if I were to open a checking account with DRB. This would bring my interest rate down to 4.25%. That's a big difference when you owe $165,000.

DRB states that dentists save $30,000 on average, and according to my accountant, I will save a lot more than that. I honestly don't want to think about the amount of money I could have saved if this was available earlier in my career. To be presented the opportunity to be done with student loan repayments in 10 years instead of 30 is liberating-in fact, it is life-changing. Instead of the debt staring down at me, I am now staring it down and saying proudly, "I've got this."

What it means for you

I do not profess to be an expert on financial matters, but I believe that this program can make a true impact on the lives of new dentists. Student loan refinancing was the right decision for me. Not everyone will qualify for DRB's program-you will need to have steady income, a decent debt-to-income ratio, and good credit. When deciding if this makes sense for you financially, you should consider the types of loans you have, their terms, and the amount you owe. You can also talk to a financial advisor to help with your decision. In the end, consolidating my loans through DRB was one of the best decisions I've made in my professional life. It could make a difference for you, too.

To learn more about the DRB benefit, visit student.drbank/ADA. For the life of the loan, your interest rate will be .25% lower than whatever interest rate you qualify for, as long as you are an ADA member.

David J. Manzanares, DDS, FAGD, is a general dentist practicing in Albuquerque, New Mexico. He graduated from the University of New Mexico with a degree in biochemistry, and in 2009, he graduated from the University of Missouri-Kansas City School of Dentistry. He is the secretary-treasurer of the New Mexico Dental Association and a member of the current class of the ADA Institute for Diversity in Leadership. He is a fellow of the Academy of General Dentistry, and he is a graduate of the Dawson Academy and of Piper Education and Research Center.

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