A new computer program for student indebtedness counseling
by Jerry Bartram, CPA, FHFMA
Background and purpose
The cost of dental education, coupled with the cost of starting or buying an existing dental practice, is becoming of greater
concern to dental schools. Banks have become more reluctant to extend loans to recently graduated dentists to purchase equipment, an existing practice or even a new house due to overall debt-to-income ratios. This
reality is not being fully appreciated by students in predoctoral dental programs. This is evident by the way they spend money, which has been borrowed, while in their predoctoral programs. The purpose of this
project was to develop a computer program that would aid faculty and students in analyzing the effect of student indebtedness upon future earning needs.
Methods and materials
A PC-based computer program was developed that would allow students to choose one of four methods of practicing: (1) working
for a salary, (2) working for a per diem or a percentage split as an associate, (3) buying an existing practice, or (4) starting a practice from scratch. The program was designed to be a modeling tool not a precise
template of cash flow. Items included in the analysis were: total student debt, average interest rate, average pay back time, taxes, number of hours worked, production per hour, percentage split, overhead
percentage, cost to start a new practice, working capital and operating overhead. To optimize program versatility, dentist income potential was related to both the method of practice and geographical location.
A survey was developed to obtain financial information from alumni while at the same time protecting confidentiality.
Results and discussion
Two hundred thirty-five alumni responded to the survey for a response rate of 6.2 %. When the alumni responded to the
question, "If you had a son or daughter graduating from dental school this spring, what financial advice would you give them?" Of the 235 that responded to this question, 104 or 44.25 % expressed concern
about personal spending and/or debt management of new graduates. Comments like "avoid debt like a plague," "keep personal spending to a minimum," "don't borrow for a new car" were
The computer model proved to be an excellent teaching tool for use during practice management courses. It has been installed on the computers available for
student use in the School of Dentistry and is being used to counsel students regarding their debt as well as advising them as they evaluate various practice opportunities. It has been used in a second-year lecture
to graphically show the need to restrict borrowing to only those expenditures that have benefit for a greater time frame then the debt amortization.
It is felt that early education in debt management will improve the future financial strategy of dentists and that proper training in
this area will help students avoid bankruptcy, bum out, ethical misconduct, divorce and other aspects of dissatisfaction with dentistry that are frequently linked to financial difficulties.
Download the software (Jerryden.zip 85K)
NOTE: YOU MUST HAVE A COPY OF MICROSOFT ACCESS 97 AND WINZIP ON YOUR COMPUTER IN ORDER TO RUN THIS PROGRAM.
Pentium 90 or faster
Microsoft Windows 95/NT
Microsoft Access 97
Copyright by Jerry E. Bartram, CPA