The Macro Problem We All Face with Student Loans

byChance October 3, 2018 1 comment

This post takes a broader view. We’ve already established that dental school is too expensive. However, the same is likely true for undergraduate degrees.

Aside from one’s ability to get more than 100k from the government with zero credit history and no collateral (that’s why tuition can keep rising); the macro problem for us all is that the student loans siphon your cash flow and basically destroy people’s backend ratios when they apply for loans to either start a business or buy a house. The problem isn’t just that huge sums of money may be “forgiven” by the government and passed on to the taxpayer, it’s that the borrow’s ability to obtain additional financing to build something that can actually support the student loans is seriously in jeopardy. A private bank would NOT loan a college kid 150k to major in communications and an addition 150k to get an MBA. So what will happen when this graduate needs access to capital to build their business and contribute to the economy in a meaningful way? The bank will probably say no, there’s too much risk, go back to your low paying job with no growth potential and continue to see your loan balance grow.

Most young dentists manage their student loans. What’s important to understand is that your patients might be managing their own student loans too. These student loans will have an impact on our patient’s ability to afford treatment or obtain financing for treatment.