Dental school leaves most new dentists with two things at the same time: the ability to earn a strong income, and a student debt balance that can easily run into six figures. That combination creates a real temptation — either throw every spare dollar at the debt as fast as possible, or ignore it and focus on building the practice, lifestyle, and savings that a dentist’s income can support.
Neither extreme is usually right. The smarter approach treats debt payoff as one part of a broader financial plan, not the only priority.
Understand What You’re Actually Paying Off
Government student loans, lines of credit, and any practice-purchase or buy-in debt often carry very different interest rates and tax treatment. In Canada, interest paid on eligible government student loans can be claimed as a non-refundable tax credit — a line of credit used for the same purpose generally cannot. Knowing exactly what you’re carrying, at what rate, and with what tax treatment is the starting point before deciding how aggressively to pay any of it down.
Should You Pay Off Debt Aggressively or Invest Instead?
This is the question almost every new dentist asks, and the honest answer is: it depends on the interest rate. Debt at a high rate is a guaranteed “return” when you pay it down early — hard to beat with investing. Debt at a low, tax-advantaged rate is a different calculation, and locking every spare dollar into repayment can mean missing years of RRSP or TFSA contribution room that doesn’t come back once the year passes.
A blended approach — meeting minimum payments, building an emergency reserve, and directing extra cash toward whichever high-interest debt exists, while still contributing something toward long-term savings — usually beats an all-or-nothing strategy.
Don’t Let Debt Payoff Delay Your Corporate Structure Decisions
Many new dentists incorporate their practice within the first few years of ownership. How you pay yourself — salary, dividends, or a mix — has a direct effect on how quickly you can pay down personal debt, since it determines your personal cash flow and taxable income. Getting this structure right early avoids paying more tax than necessary while you’re also trying to pay off debt.
Build the Habit, Not Just the Payoff Plan
The dentists who get out from under student debt fastest usually aren’t the ones with the most aggressive spreadsheet — they’re the ones who automate a consistent payment and savings amount early, before lifestyle spending expands to fill the gap. Debt payoff and wealth building aren’t sequential steps where one has to finish before the other starts; they can — and usually should — happen at the same time.
Related Service: Learn more about our financial planning services for dentists.
This article provides general educational information and is not personalized financial, tax, or legal advice. Individual circumstances vary — book a meeting to discuss your specific situation.
