Hey! I'm Robbie, the founder of Roots Financial Planning, a fee-only, fiduciary advisor located in San Antonio, TX working virtually with dentists across the United States. When I'm not helping dentists live their best life, you can find me making pizza, swimming, or skiing.
Student Loan Terminology
Principal
Principal is the original amount you borrowed when the loan was first issued. If you needed $100,000 to pay for all school costs as a D1, then your principal balance would be $100,000.
Interest
Interest is the cost to borrow the principal amount expressed as an annual percent.
Student loans use a simple interest calculation. Simple interest means the accumulating interest calculation is only applied to the principal balance and not a combination of principal and accumulating interest. Imagine you have two different buckets, a principal bucket and an interest bucket. The interest rate only applies to what is in the principal bucket. And the interest bucket holds any interest that accumulates from this calculation.
Let’s use an example principal balance of $100,000 at an interest rate of 5%. After one year, you would have a principal balance of $100,000 and an interest balance of $5,000. After two years the principal balance would be $100,000 and the interest balance would be $10,000. It would continue to grow at this linear rate until capitalization takes place.
Capitalization
Capitalization is when the interest accumulated on your student loan is added to the principal balance creating a larger principal balance. Going back to the bucket analogy, the interest bucket has been emptied into the principal bucket. This causes interest to accumulate at a slightly faster rate.
Imagine that your D4 student loan need was $100,000 at an interest rate of 5%. After one year the principal balance is $100,000 and the interest balance is $5,000. If capitalization occurs, the principal balance becomes $105,000 and the interest balance is reset to $0.
The most common reason for interest capitalization is consolidation.
As of July 1, 2023, interest will no longer capitalize at the following times:
- When you first enter repayment
- When you leave a forbearance
- If you do not recertify your income on time when using an Income Driven Repayment (IDR) plan
- When using the Pay As You Earn (PAYE) plan and your payment would exceed the payment cap
- During periods where your monthly payment is less than the amount of monthly interest accrual while using certain IDR plans
- When you default on your loans
Consolidation
A consolidation is when you combine multiple federal student loans into one new loan that is still held in the federal system.
Refinance
Refinancing is when you exchange one or more federal student loans for a private student loan that is not held by the federal system. This is most common after school is complete and you are seeking a lower interest rate in order to pay the loan off faster. It’s worth noting that refinancing should not be completed if you cannot achieve a lower interest rate
Refinancing can also be done from one private lender to another private lender.
Deferment
Deferment allows you to stop making payments or make reduced payments. Subsidized federal loans (undergrad loans) do not accrue interest during deferment. However, you will not have any subsidized loans from dental school because they are for undergraduate school only.
The most common type of deferment is in-school deferment. This is when you are enrolled at least half time at a qualifying school.
Other deferments include unemployment, financial difficulties, and active-duty military service. These types of deferment must be approved by your student loan servicer.
Forbearance
Forbearance allows you to stop making payments or make reduced payments. During a forbearance, interest continues to accrue on all types of loans. Forbearance is granted for no more than 12 months at a time. There are two different types of forbearance.
General forbearance is granted if you are experiencing financial difficulties, have excessive medical expenses, or recently changed jobs. General forbearance must be approved by your servicer on a case-by-case basis.
Mandatory forbearance has several different prerequisites. The most common among dentists is enrollment in a dental residency program. Another would be service with the AmeriCorps, National Guard, or Department of Defense. And lastly, if your student loan payment is greater than 20% of your monthly gross income.
The reason it is mandatory, is because your servicer must grant the forbearance if you meet any of the prerequisites. It is not automatic though; you will still need to complete an application.
Default
Default occurs when you fail to make payments on your student loans for 270 days (9 months). It can also happen if you to fail to meet any other requirements stated in the promissory note (the legal contract).
This is not a place you want to be. There are numerous consequences. Including wage garnishment, additional fees, damage to your credit, and more.
Grace period
The grace period is a six-month time frame that occurs after you graduate, leave school, or drop below half-time enrollment in which you are not required to make payments on your student loans. This period is intended to provide time to assess your situation and figure out a repayment strategy. However, you can make payments if you so choose.
Discretionary income
For most Income Driven Repayment (IDR) plans, discretionary income is your Adjusted Gross Income (AGI) minus 150% of the poverty line for your state and family size (225% of the poverty line is used for SAVE). This number is the starting point for calculating your payments when using IDR plans. This isn’t something you will have to calculate, though it is important to know how for planning purposes and to check the math of your servicer.
Example: Heather lives in Texas and has an AGI of $100,000. Heather is also married and has one child which gives her a family size of 3. She is also using the PAYE plan to repay her student loans. For a family of 3 in the contiguous states, we see that the poverty guideline is $24,860 (2023). Since the PAYE plan uses 150% of the poverty guideline, we can multiply $24,860 by 1.5 to arrive at $37,290.
Heather’s discretionary income will be $100,000 - $37,290 = $62,710.
New borrower
A new borrower is a borrower who does not have an outstanding student loan balance at the time a new loan is received. This means that if you entered dental school on day 1 with no student debt in your name, then you’re a new borrower.
You’re also a new borrower if you previously paid off student loans. If you obtain a new loan while having a $0 balance, you will be regarded as a new borrower.
Debt-to-income ratio
Your debt-to-income ratio is your student loan balance divided by your income. Debt-to-income ratio can mean slightly different things in other industries like home loans so it is important to differentiate. For example, if your student loan balance is $500,000 and your gross income is $150,000, then your debt-to-income ratio is 3.33. This value can help you estimate which repayment method is best for you.
Loan servicer
Your loan servicer is the company that is assigned to facilitate student loan payments between you and the Department of Education. Some of the most common servicers are Mohela, Aidvantage, Nelnet, and EdFinancial. Your servicer is your main contact for payment related things. However, you will still go to the student aid website to accomplish things like loan consolidation and recertifying your income for IDR plans. If you don't know who your servicer is, login to your studentaid.gov account to find out.
Types of student loans
There are two main categories of student loans: federal and private.
The majority of student loans are issued by the Department of Education in the federal loan program.
There are many different types of federal student loans. Some of which are no longer issued anymore. As a dentist, we are only going to focus on the loans you are most likely to encounter. This group makes up the majority of federal student loans:
- Subsidized and Unsubsidized Federal Stafford Loans
- Direct Subsidized and Unsubsidized Loans
- Direct PLUS Loans
- Federal Family Education Loans (FFEL) (not issued after July 1, 2010)
Private loans are issued by any bank or institution that is not the federal government. They do not appear under your federal student loan file at studentaid.gov. Private loans are less common for the initial funding of education and more common when you refinance to pay the loans off more aggressively. The downside to private student loans is that they are not eligible for any government benefits like forgiveness, deferment, or flexible repayment plans.
Federal Repayment Plans
Fixed Repayment Plans
Standard
The standard plan is generally the default plan you are placed on when you enter into repayment. It features fixed payments over 10 years. At the end of the 10 years, you will have paid off your loans in full. From the start, you will know exactly how much you will pay each month and for how long.
Graduated
The graduated plan features payments that start lower than the standard 10-year plan and increase every two years paying off the loans in 10 years. By the end of the term the payments will be greater than the Standard 10-year plan.
Extended
The extended plan features fixed payments over up to 25 years. Your monthly payment will generally be lower than the standard or graduated plans. At the end of the 25 years, you will have paid off your loans in full.
Income Driven Repayment (IDR) Plans
Income Based Repayment (IBR)
In this plan, payments are calculated as 10% of your discretionary income. You must be a new borrower after July 1, 2014. If you are not a new borrower after July 1, 2014 then your payments will likely be 15% of discretionary income. Discretionary income for the IBR plan uses 150% of the poverty line for the calculation. Your payment on this plan must be less than the Standard 10-year plan to be eligible. Once you enroll in this plan, your payment can never rise above what your Standard 10-year payment would have been. You will receive taxable forgiveness on the remaining balance after 20 years of payments. If you are married, you can use the Married Filing Separately (MFS) tax status and base payments on your income separate from your spouse’s.
Pay As You Earn (PAYE)
In this plan, payments are calculated as 10% of your discretionary income. Discretionary income for the PAYE plan uses 150% of the poverty line for the calculation. Your payment on this plan must be less than the Standard 10-year plan to be eligible. Once you enroll in this plan, your payment can never rise above what your Standard 10-year payment would have been. You must be a new loan borrower on October 1, 2007 and also have a loan issued after October 1, 2011. You will receive taxable forgiveness on the remaining balance after 20 years of payments. If you are married, you can use the Married Filing Separately (MFS) tax status and base payments on your income separate from your spouse’s.
Revised Pay As You Earn (REPAYE)
In this plan, payments are calculated as 10% of your discretionary income. Discretionary income for the REPAYE plan uses 150% of the poverty line for the calculation. Any borrower with eligible loans can make payments on this plan. Once you are on this plan, your payment can rise above what your Standard 10-year payment would have been. Meaning there is no cap to how high your payment could be. You will receive taxable forgiveness on the remaining balance after 25 years of payments (20 years if only paying undergraduate loans). Half of the unpaid interest that is above your required monthly payment will be paid by the government. If you are married, you must base payments on your combined marital income even if you use the MFS tax status. REPAYE is being replaced by SAVE during 2024. Some of the REPAYE rules may or may not still apply by the time you read this.
Saving on a Valuable Education (SAVE)
SAVE is set to replace REPAYE completely during 2024. You cannot enroll in SAVE directly at the time of this writing. However, some of the benefits are already available if you enroll in REPAYE today. In this plan, payments are calculated as 10% of your discretionary income for dental school loans. If you have any undergraduate loans, the payment would be 5% of discretionary income on those loans. Discretionary income for the SAVE plan uses 225% of the poverty line for the calculation. In other words, this helps to lower payments even further. Once you are on this plan, your payment can rise above what your Standard 10-year payment would have been. Meaning there is no cap to how high your payment could be. You will receive taxable forgiveness on the remaining balance after 25 years of payments (20 years if only paying undergraduate loans). Any unpaid interest that is above your required monthly payment will be paid by the government. If you are married, you can use the Married Filing Separately (MFS) tax status and base payments on your income separate from your spouse’s.
How to enroll in an IDR plan
If no plan is chosen, you will be automatically enrolled in the Standard 10-year repayment plan. For most dentists, that is not usually the plan you want to use.
- Go to studentaid.gov/idr
- The first option you see will be “New IDR Applicants.” Click the blue button to get started. Be sure you are logged into your account.
- Next you will need to approve or decline the right of the Department of Education to automatically retrieve your tax return information each year. If you decline, you will need to provide documentation of income yourself.
- Next, you will confirm your personal information.
- Then you will confirm the loans you want to include on the IDR plan.
- Then you will answer several questions about your marital status and how you filed your taxes. If you are single, you will skip most of this section.
- If you are married, you will enter your spouse's personal information.
- Next, you will be asked about your family size and if it is expected to change within the next 12 months.
- Next, it will ask if you've filed your taxes in the past two years and whether your income has decreased.
- If needed, it will then ask you to provide documentation of income if a tax return is not available or does not provide an accurate representation of income.
- Now it will show you estimates of what your new monthly payment will be.
- Then, you will select the plan to proceed with.
- Last, you will review all the information you have entered and submit for processing.
Student Loan Forgiveness
Student loan forgiveness only occurs with federal student loans. If you have private loans you will have to pay those back. There are two paths to forgiveness: public service loan forgiveness (PSLF) and taxable forgiveness.
Who is a good candidate for forgiveness?
Generally, when you’re a dentist with a large amount of loans compared to your income, you are a good candidate for forgiveness. The larger your debt-to-income ratio, the better forgiveness will look mathematically.
Debt-to-income ratio is not the only indicator though. If you are looking to buy into a practice as soon as possible, this could cause your debt-to-income ratio to decrease dramatically. As your practice takes off, this could decrease the effectiveness of forgiveness. This is why it is important to have long-term goals in mind when looking at your repayment options.
You also need to consider your temperament for debt. If you do not want pay your student loans for the required 20-25 years until taxable forgiveness, you might be better off with the peace of mind paying them off sooner.
Public Service Loan Forgiveness (PSLF)
PSLF is tax-free forgiveness granted after several prerequisites are met. You must make 120 on time payments (10 years of monthly payments). While making these payments you must be employed at a 501(c)3, non-profit, or government employer. The payments must also be made on an IDR plan.
After all three of these requirements are met, any remaining balance on your loans is forgiven. When pursuing PSLF, the best-case scenario is to pay as little as possible each month and have a large amount forgiven at the end.
Is PSLF right for you?
First, assess whether you intend to work for a qualifying employer for at least 10 years. If you plan to pursue a career in private practice, PSLF would not be applicable to you.
If you foresee yourself spending a minimum of ten years at a qualifying public service employer, and your debt-to-income ratio exceeds 1.25, then PSLF might be a suitable path for you.
Another scenario where PSLF could be beneficial is if you have a long residency. Many residencies qualify as PSLF-eligible jobs. For instance, if you specialize in oral and maxillofacial surgery and complete a six-year residency, you could continue working in public service for a few more years and have your loans forgiven relatively quickly after residency.
To take advantage of PSLF during your residency, you would need to opt for an IDR plan rather than pursuing in-school deferment. Since resident pay is generally not substantial, IDR plans often result in very small monthly payments during residency.
Taxable Forgiveness
Taxable forgiveness is granted after making 20-25 years of qualifying payments on any of the IDR plans. There are no additional employment requirements to be eligible. At the end of the repayment term the remaining balance is cancelled and added to your income for tax purposes. This means you will have additional tax obligations even if your income remains unchanged. This additional tax is often referred to as the tax bomb.
Is taxable forgiveness right for you?
If your debt-to-income ratio is 1.25 or higher, taxable forgiveness might be an advantageous strategy for you. The greater your debt-to-income ratio, the more beneficial this approach becomes. Opting for taxable forgiveness also provides increased cash flow flexibility early in your career. By enrolling in an IDR plan, your payments are likely to be significantly lower than those of the standard 10-year plan. This surplus money can then be utilized in other ways, such as investing in a dental practice, making a down payment on a home, or starting a family.
Another advantage of the taxable forgiveness path is that it encourages pretax retirement savings. You can achieve this by contributing to a 401(k) offered at your dental office or by opening a personal traditional individual retirement account (IRA). These pretax savings will reduce your adjusted gross income (AGI), resulting in lower required student loan payments.
The primary goal of taxable forgiveness is to minimize your total payments over time while having a substantial amount forgiven at the end of the repayment term. In ideal circumstances, the combined cost of your payments and the cancellation tax could end up being lower than repaying the loan in full. However, it's essential to note that as of August 2023, there will be additional taxes due upon forgiveness. To prepare for this potentially significant tax burden in the future, it's advisable to start saving additional funds.
Should you consolidate your federal loans?
Consolidation has benefits and drawbacks. Let’s take a look at benefits first. Consolidation can be used to simplify your student loan situation. Instead of having payments that go to multiple loans, you can have one single loan with a payment. Consolidation allows you to exit the post-graduation grace period early and begin making payments towards forgiveness. Consolidation can make some types of loans eligible for IDR plans if they were previously ineligible.
One downside is a slight increase to the interest rate. Consolidation will cause the interest rate to round up to the nearest 1/8th of 1 percent. For example, if the weighted average interest rate of your loans is 6.1%, this would round the rate to 6.125%.
Prior to July 2023, consolidation would reset any payment credit you have towards forgiveness. This is no longer the case. At this time, there are more benefits to consolidation than there are drawbacks.
How to consolidate your federal loans
- Determine ahead of time which repayment plan and which servicer you will select. If you are married, know whether you will be filing taxes separately or jointly. Your most recently filed tax return can guide this selection.
- Head to the studentaid.gov/loan-consolidation.
- You will be asked to choose which loans you would like to consolidate.
- If you are a recent graduate and want to exit the grace period as early as possible, select the option to begin the process immediately without delay.
- You will be asked which servicer you would like to use.
- Next, you will be prompted to select your desired repayment plan.
- If you will be using your most recent tax return as proof of income you will be able to link to the IRS database to retrieve it.
- If you are married, your spouse might need to cosign on the consolidation loan. They will need to create a Student Aid account and complete this process on their end.
- Once you have signed the application (and spouse if applicable) you will wait for further instruction.
Recertifying your income annually
When you use an IDR plan, your monthly payment is based on your income. Because of this, you are required to recertify your income every 12 months in order to adjust your monthly payment. If your income goes up, your payment will go up. If your income goes down, your payment will go down.
In addition to income, your family size is also updated. Changes to family size include marriage, having a child, adopting a child, or even caring for another family member. If you provide more than half of their support, they count as a dependent.
As of August 2023, the new recertification system will allow you to consent to automatic recertification each year. If you allow it, the Department of Education will pull your most recent tax return from the IRS each year. If you do not have a complex situation, and your tax return is an accurate representation of your income, then this is a great option so that you never forget to recertify. If your situation involves more complexity, it may still be necessary to manually recertify each year.
How to recertify your income and family size annually
- Go to studentaid.gov/idr.
- As a returning IDR borrower, select the option to begin the process under the returning IDR borrower heading. Be sure to login to your account first.
- You'll have several options to choose from when managing your IDR payment. If you are logging in to recertify as part of the annual process, you will select "Manually recertify my IDR plan."
- Next, it will ask for your consent to link to the IRS website in order to retrieve tax return information.
- Answer questions related to your marital status and how you filed your tax return if married.
- If you are married, you will enter your spouse's personal information.
- Next, it will ask if you've filed your taxes in the past two years and whether your income has decreased.
- If needed, it will then ask you to provide documentation of income if a tax return is not available or does not provide an accurate representation of income.
- Now it will show you estimates of what your new monthly payment will be.
- Then, you will select the plan to proceed with. Most of the time you will not be switching plans.
- Last, you will review all the information you have entered and submit for processing.
What if you forget to recertify?
If you forget to recertify, there are various penalties that vary slightly depending on which IDR plan you were using. For the most part, the penalties are similar, and include the following:
- You will be switched to the 10-year Standard plan and payments will be based on your balance at the start of IDR. In other words, your payment will increase in most cases.
- Your servicer will assume a family size of one. If you have a family size larger than one already, it will cause your monthly payment to increase.
Luckily, you can return to your IDR plan of choice if you proceed with a late recertification and still qualify for your plan of choice. Generally, your servicer will send recertification reminder emails a few months before it is due. Watch out for those as a reminder.
Submitting an annual PSLF form
When pursuing PSLF, it is crucial that you keep track of every payment that you make in order to receive forgiveness on time. It is recommended that you complete the PSLF form annually in order to track your progress and ensure your payments are counting.
The most efficient way to complete this form is via the PSLF help tool. You’ll be able to complete the form online and send in to your employer all in one place.
After the Department of Education receives your completed form, they will inform you of any errors or if you do not qualify in some way. You will be given the chance to dispute any issues if you believe there is a mistake.
How can you lower your payments on IDR plans?
Your monthly payment on an income driven repayment (IDR) plan originates from your adjusted gross income (AGI). Because of this, the primary way to lower your payment is to lower your AGI.
One of the easiest ways to lower your AGI is to contribute to pre-tax retirement accounts. You will likely want to do this anyway in order to save for your future. Any money that goes into a pre-tax retirement account is excluded from your AGI. These accounts include 401(k), 403(b), 457(b), Traditional IRA, SEP IRA, and SIMPLE IRAs.
Another type of investment account you can contribute to pre-tax is a Health Savings Account (HSA). An HSA is intended to be used for qualifying medical expenses. However, it can be saved and invested just like the other pre-tax retirement accounts. One caveat is that you must be enrolled in a high deductible health plan (HDHP) in order to contribute.
If you are married, you can use the married filing separate (MFS) tax status to lower your AGI. Instead of using your income plus your spouses, you can use just your income to calculate monthly payments.
You can take the MFS status even further by moving to a community property state. If you are the dentist earning a higher income and have a large student loan balance, this could be a way to lower your student loan payment. Community property states include: Washington, Idaho, California, Nevada, Arizona, New Mexico, Texas, Louisiana, and Wisconsin. Read on to the next section to learn more about MFS and community property states.
Filing taxes Married Filing Separately (MFS)
Using the MFS tax status is a rare occurrence in the normal tax world. It is used for some very niche circumstances. To add to that, the tax brackets are much narrower, meaning you get taxed at a higher rate with a lower amount of income. Additionally, several deductions and credits are not allowed when using this status. However, for those with large student loan balances it can be beneficial.
The reason MFS is more common for those with many student loans is because of IDR plans. When you’re pursuing PSLF or taxable forgiveness, IDR plans make it possible to pay as little as possible over time and have the remaining balance forgiven at the end of the term. Your monthly payment is based on your household income by default. If you are able to separate your income from your spouse, then that means your student loan monthly payment will be even lower.
Example: Haley and Ryan are married and live in Colorado. Haley’s adjusted gross income (AGI) is $200,000 and she has $500,000 in student loans. Ryan’s AGI is $100,000 and does not have student loans. Haley has decided to use the PAYE plan which is 10% of discretionary income.
Scenario 1: If Haley and Ryan file taxes married filing jointly (MFJ), Haley’s monthly payment would be about $2,253.50. This calculation uses their total income of $300,000. In this scenario using an IDR plan and planning for forgiveness would likely result in them paying more towards the loans than if they had just paid them off on the standards 10-year plan.
In a common law or separate property state like Colorado (41 of 50 states are common law), income on an MFS return is assigned to the person that earned it.
Scenario 2: If Haley and Ryan file taxes MFS, Haley’s monthly payment would be about $1,484.41. This calculation only uses Haley’s income of $200,000. In this scenario using an IDR plan and planning for forgiveness is starting to look good. There is a real chance that they could pay less over 20 years (including the tax bomb) than they would using the Standard 10-year plan. In this year alone, they would save $10,000 in loan payments which would likely offset any additional tax burden. However, amending your tax return is also an option that we will discuss at another time.
MFS sounds pretty nice now based on the above scenario. However, it can get better, and potentially more complicated. There are 9 community property states: Washington, Idaho, Nevada, California, Arizona, New Mexico, Texas, Louisiana, and Wisconsin. When you live in one of these states, the rules are different for splitting your income. Instead of assigning the income to the person that earned it, all household income is added together and divided equally.
Scenario 3: If Haley and Ryan file taxes MFS in a community property state, Haley’s monthly payment would be about $1,064.37. This calculation uses a community property split which makes Haley’s income $150,000 (($200,000 + $100,000) / 2). In this scenario using an IDR plan and planning for forgiveness looks even better than ever. This scenario could result in over $100,000 of savings compared to the Standard 10-year plan.
What should you do with your student loans in residency?
If you choose to pursue any dental specialty, you will be facing more school and possibly more student loans. It is to your advantage to choose what happens to your loans during your residency. There are several options to consider.
Mandatory in-school forbearance is an option if you are unable to make any payments. It is also the easiest method. You need to apply for this because it doesn’t happen automatically like in dental school. If your residency is longer than one year you will need to reapply each year.
Another option is using an IDR plan. This is a great strategy for anyone planning for forgiveness down the road. You will likely have $0 or very small required payments for the first year after dental school. This method will require recertification of income during residency and after. The new SAVE plan makes this option even better than it was previously.
If you have a low student loan balance and know you will repay your loans, you could use either of the above strategies. The SAVE plan will likely be your best option due to interest not accumulating. Additionally, you can choose to make additional payments if you are able to.
Should you overpay your student loans?
Overpaying your loans should be exclusively pursued by dentists who are planning to pay their loans off in full (not forgiveness). Generally, this is also dentists with relatively low student loan balances. This will also likely apply to you if your student loan balance is less than your annual income.
Often times, when a dentist is truly ready to make aggressive student loan payments, they will also refinance the loans to take advantage of a lower interest rate in order to save the most money. If you’re unsure about your income situation, you can always stay on an IDR plan in order to have the security of lower required payments. In this scenario, you have the flexibility to make extra payments whenever you have the means to do so.
Private Refinancing
When you refinance your federal student loans into private loans you are issued a brand-new loan with a new repayment period and new interest rate. Refinancing should not be considered if you can’t acquire a lower interest rate. Once you leave the federal system there is no going back. You must be sure this is the direction you want to pursue before committing to it.
Refinancing is often pursued when you want to pay your loans off as quickly as possible. The reduction in interest rate will help to reduce the amount you pay over time.
Is private refinancing right for you?
If your debt-to-income ratio is 1.25 or lower, private refinancing is more likely to be the best solution for you. Pursuing taxable forgiveness with a low debt load would likely result in full repayment before any forgiveness takes effect. By refinancing to a lower interest rate, the main objective is to repay the loan as quickly as possible, thereby minimizing the total amount paid during the repayment period.
However, it's important to carefully consider the decision to opt for private refinancing because once you leave the federal system, there is no option to return. Before committing to this direction, be certain that it aligns with your long-term financial goals.
Military and Health Services
Health Professions Scholarship Program (HPSP)
The HPSP provides a unique way to pay for your dental education. The program offers 2-, 3-, or 4-year scholarships in exchange for a military service commitment equal to at least the number of years you accepted the scholarship. In addition to paying for your education, you will also receive a monthly living stipend for personal expenses. There is also the potential for sign on bonuses of varying amounts. Each year you will have additional military specific training to attend that is paid for.
The Army, Navy, and Air Force all offer the HPSP scholarship. The benefits you receive are generally the same across all branches. The number of scholarships available each year varies depending on the military branch and the need for that year.
Health Services Collegiate Program (HSCP)
The HSCP is a scholarship program designed to offer financial incentives to students in health care professions and to provide an opportunity to be commissioned in the Navy. It has some similarities to the HPSP with some major differences.
The HSCP is only offered by the Navy. While attending school you receive full military pay and benefits of an active-duty officer. This includes full medical, dental, and vision benefits for you and your family. This also includes a housing allowance based on your location. Tuition costs come out of your pocket. The HSCP does not pay your tuition directly. Because of this, a less expensive state school is a better option in combination with the HSCP. A more expensive private dental school would not have the full cost covered under the HSCP.
Another difference is that the service requirement is 8 years. However, your time in school counts toward that total so the out of school commitment is usually the same as the HPSP at 4 years. If you pursue an AEGD or GPR it is a neutral year and may not be counted as part of service commitment.
Health Professions Loan Repayment Program (HPLRP)
The HPLRP is a program that allows for up to $40,000 (pre-tax) per year of loan repayment in exchange for and equivalent amount of military service. This program is offered by the Navy and Air Force. The Navy offers up to 3 years and the Air Force offers 2 years.
You are not eligible for this if you are currently using the HPSP.
National Health Service Corps (NHSC) Scholarship Program
The NHSC scholarship program offers 2 – 4 year scholarships in exchange for service at NHSC approved clinics. Like the military scholarships, your service commitment is equal to how many years of scholarship you accepted. Tuition is paid directly to the school you are attending. Additionally, you will receive a stipend to support a portion of your living expenses.
National Health Service Corps (NHSC) Loan Repayment Program
The NHSC loan repayment program is for post school loan repayment. You can receive up to $50,000 for a two-year service commitment. You can apply for additional repayment assistance but there is no guarantee you will be accepted. The amount you receive in one of these repayment programs is not substantial compared to the scholarship programs.
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