Skip to content


Paying Off Dental School Debt: The Education Loan Reduction Fringe Benefit


Most associate dentists face the reality and burden of dealing with dental school debt. It can be significantly challenging, expensive, and complex to navigate. The federal government has introduced two provisions to help alleviate the financial burden of student loan debt. This includes dental professionals who have taken undergraduate or graduate-level courses. The provisions include a non-taxable fringe benefit in the form of student loan repayments, and an option for employers to match employee student loan repayments by making contributions to an approved retirement account. These provisions not only offer financial relief to associate dentists but also present an opportunity for dental practices to attract and retain top talent.

In this blog post, we’ll explore the new education loan reduction and their benefits for both associate dentists and dental practices.

The Financial Strain On Associate Dentists

Associate dentists often face huge financial strain due to the many years of rigorous education and training that’s required, which often results in substantial dental school debt. Most general dental associates face an average education debt of around $300,000 and it can be much higher for dental specialists. Many associate dentists are dealing with the stress of balancing their professional goals while trying to pay down their dental school debt.

Educational Assistance Programs

The federal government has recently introduced additional legislation under Employer-Provided Educational Assistance Benefits – IRC Sec. 127. This allows employers to pay up to $5,250 towards student loan repayments per year as a non-taxable fringe benefit, up until December 31, 2025. If you’re a dental practice owner who provides the Section 127 fringe benefit to your dental associates, you can deduct these costs as a business expense when calculating your end-of-year tax liability. However, there are certain rules around qualifying for this benefit, so be sure to check with your accountant before offering it to your dental staff. When implemented correctly, Section 127 is a great incentive which can help dental practices and dental associates work together to support each other in the long-term.

Retirement Plan Matching 

In addition to Section 127, the SECURE 2.0 Act introduces a revolutionary change for employers, allowing you to make matching contributions to Simple IRA or 401(k) plans on behalf of your employees. The matching contributions are based on the employee’s student loan repayments made throughout the year, and are classified as elective deferrals or after-tax contributions when calculating your matching employer contribution. This is a great incentive to help your associates pay down their dental school debt with an added bonus.

The Secure 2.0 Act provides a dual benefit, encouraging dental associates to save for retirement while simultaneously addressing their dental school debt. By offering more incentives to dental associates, you can support your staff and improve satisfaction while reducing burnout and employee turnover. However, as with Section 127, certain criteria need to be met before implementing this process, and 401(k) plan amendments may be required.

Benefits For Associate Dentists

  1. Debt Reduction:
  • Dental associates can focus on their professional growth without overwhelming student loan repayments.
  • Reduced dental school debt leads to lower stress which can lead to improved morale among dental associates.
  1. Faster Debt Repayment:
  • Dental associates can pay down their student loans faster with the help of their employer.
  • By shortening the overall loan repayment period, it can result in less interest being paid by dental associates.
  1. Increased Morale and Loyalty:
  • Dental practices who help their associates pay off their dental school debt will increase overall job satisfaction, morale, loyalty, and well-being among their staff.
  • Education loan benefits can improve long-term relationships between dental associates and practice owners.

Benefits For Dental Practices

  1. Become A More Competitive Practice:
  • By offering education loan benefits to your staff, you can become a highly sought-after employer in a competitive market.
  • Dental practices can differentiate themselves by assisting with dental school debt, especially with recent graduates who have student loans to repay.
  1. Improved Staff Performance:
  • Supported associates are likely to be more productive, focused, and achieve better results for your dental practice. 
  • By helping your associates pay off their dental school debt, your dental practice can improve their financial well-being and benefit from a fully engaged and happier team.
  1. Enhanced Reputation For Your Dental Practice:
  • With more engaged associates producing better quality work, you can improve the overall reputation of your dental practice.
  • Your patients will appreciate the respect you have for your team, and will feel the difference every time they come in for a dental appointment.
  1. Improved Dental Practice Success
  • By investing in your dental associates, you can reduce stress, burnout and turnover among your employees, which will contribute to your business success.
  • Dental associates who are happy to come to work will invest their time back into your business.

How A Dental CPA Firm Can Help

Implementing the education loan changes around dental school debt may seem complicated and daunting, especially as there are specific criteria that need to be met in order to access the tax deduction in your business. A Dental CPA firm can help you navigate the intricacies of these new legislation changes and make sure you’re minimizing your tax liability. Working with a specialized advisor can help save you a lot of stress and avoid IRS penalties down the track.


Many dental associates face the daunting prospect of paying off their dental school debt. These new legislative changes provide a way for employers to offer financial assistance to their hard-working associates. If you’re a dental practice who adopts this strategy, you can promote the wellbeing of your associates and establish yourself as a competitive practice who supports their employees. By building a dynamic team, you can help your dental practice overcome industry challenges. Integrating non-taxable education benefits can play a pivotal role in fostering a supportive professional atmosphere for your associate dentists, which ultimately benefits your dental practice and your patients.

To find out more about how to implement the education loan fringe benefits for your dental practice, book a free consultation with our expert team of Dental CPAs here at Drilldown Solution.

Check Out Our Other Popular Blogs

5 Keys to Putting Kids and Family Members on the Payroll

How Much Can a Small Business Make Before Paying Taxes

7 Ways to Improve Your Dental Practice Profits

Tax Deductions Available When You Refinance Your Home


Note: The material and contents provided in this article are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

Ed Gabriel, CPA is President of DrillDown Solution and a graduate of Brigham Young University. His clients benefit from over 40 years of experience in maximizing profits, minimizing taxes and putting them in the best financial position possible.