Back in 2007, before securing his first job as an associate, managing his finances, including his $217,000 student loan debt, was not top of mind for him and some of his peers, he said.
“They didn’t want to deal with the headache,” he recalled.
Indeed, loan consolidation, or combining multiple education loans into one loan, resulting in a single monthly payment with the goal of getting a lower interest rate, can seem overwhelming to the new dentist seeking options to manage his or her hefty student loans.
After all, educational debt for senior dental students in 2015 averaged about $255,000, according to the American Dental Education Association.
Dr. Ritchie turned in part to organized dentistry for some answers on how to begin the loan consolidation process. Being part of the American Student Dental Association and taking advantage of the workshops and information it provided helped Dr. Ritchie pay attention to “the broader picture,” he said.
“Being involved in organized dentistry, you hear things that get you more educated on topics beyond what you learn in dental school, including loan consolidation,” he said. “That’s when I kind of felt that ‘OK, I’ve got to do this.’”
Dr. Ritchie connected with a now-defunct bank in Minnesota. It worked out. After graduating and taking an associateship for five years before moving to a general dentistry practice that he co-owns in Hutchinson, Minnesota, he was able to pay off a quarter of his consolidated loan quickly, and also secure a low — 1.875 percent — rate for the rest of it.
Looking back, he realizes he signed off on that plan as a “leap of faith,” but acknowledges that new dentists now have more resources so they don’t have to jump in feeling insecure.
For example, in 2015, the ADA endorsed Darien Rowayton Bank’s student loan consolidation/refinancing program.
According to the ADA, this relationship between the bank and the ADA provides “unmatched opportunities for ADA members to refinance existing federal and private undergraduate and graduate school loans at a 0.25 percent lower rate than DRB’s already-low rates.”
Since the ADA’s endorsement, more than 850 ADA members have refinanced with Darien Rowayton Bank, and they are saving nearly $32,000 on average refinancing over the life of their loan.
Dr. David Manzanares said he found out he would be finished paying off his loans in nearly 10 years, instead of 30 years, with the same monthly payments and a lower interest rate (it dropped by 2.5 percentage points) after he consolidated with DRB.
“I can’t tell you what a relief it is,” he said in a promotional video produced by the ADA. “I can’t tell you what a difference it’s making in my life.”
New dentists can get many of their questions answered about who best qualifies for loan consolidation, and take a survey to find out if refinancing is a good option for their personal situation, at ADA.org/mydebt, a web portal the ADA launched earlier this year. It features budgeting tips, debt load and loan repayment calculators and resources on federal and state loan repayment options.
Dr. Ritchie suggests that those considering refinancing should do research on and only strike a deal with legitimate banks that are trustworthy. Run proposed contracts by an accountant or an attorney if you still feel unsure, he suggested.
“I don’t recommend going with a plan you’re not feeling comfortable with,” he said.
For more information about Darien Rowayton Bank and resources from the ADA on loan consolidation, visit student.drbank.com/ADA.