Jaw dropping. I had no idea this was even possible. They will never dig out.
The link to the WSJ article won’t work if you don’t subscribe, but it starts out:
"DRAPER, Utah—Mike Meru, a 37-year-old orthodontist, made a big investment in his education. As of Thursday, he owed $1,060,945.42 in student loans.
Mr. Meru pays only $1,589.97 a month—not enough to cover the interest, so his debt from seven years at the University of Southern California grows by $130 a day. In two decades, his loan balance will be $2 million."
Another summary:
"Orthodontist Mike Meru, 37, is one of those borrowers. Meru borrowed $601,506 to attend the University of Southern California’s program, he told The WSJ. Within a few years, his debt had swelled to $1,060,945.
Meru, who earned $225,000 as an orthodontist in 2017, makes monthly payments of $1,590 against his debt on a government-sponsored repayment plan, but that isn’t enough to cover the interest. His debt grows $130 a day, meaning his loan balance will exceed $2 million in two decades.
After 25 years, Meru’s remaining balance will be forgiven at taxpayers’ expense."
How is this allowed? No annual or lifetime cap?
https://dentistry.usc.edu/programs/dds/cost-of-attendance/ lists USC dental school costs.
In other threads, people complain about dentists upselling, or finding “needed” dental work that is not really needed. Perhaps the enormous debt pressure from dental school and starting/buying a practice can lead to ethical compromises.
Medical school is also expensive, and is mostly the domain of those from higher income and wealth families: http://in-training.org/wanna-go-medical-school-better-rich-12070
He has no incentive to even try to pay this off. $1589/month is not much with his $225,000 annual income, the balance will continue to grow, and then be forgiven. The taxpayers are getting a raw deal here for sure.
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How is this allowed? No annual or lifetime cap?<<
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Only limit is the COA of the school while attending. Obama proposed limits, but they didn’t go through. When his debt is forgiven, he will owe taxes on the forgiven amount, so then he’ll have a payment plan with the IRS.
I couldn’t read the whole article since I don’t subscribe to the WSJ. At what point is the loan forgiven, and why?
I have a friend who’s a dean at a graduate school. She said that she suspected one student was in school basically in order to live off loans – she said the student wasn’t interested in the field of study but seemed to be treating the loans like an ATM.
Holy JPMorgan. God forbid my granddaughters will ever need braces!
Federal student loan forgiveness, cancellation, and discharge information:
https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation
Still, even with a million dollars of debt, couldn’t he live like an median income person or (even more frugally) a dental student, so that he would have $100,000 or more each year to pay down the debt before he retires?
That would probably be 15 years of frugality. And he is not that young! To earn $225k, he needs to be in a very expensive COL area… so $75k or so he has left after paying down that debt and taxes is not much. 
He could pay more, but why? He’s in a program that results in forgiveness, and he’s paying what his plan requires…
But I was just reading something yesterday about the forgiveness programs. They aren’t fully funded and many have applied for public service forgiveness and been turned down. That’s a 10 year program. This dentist is on the 20-25 year forgiveness programs and I don’t think anyone has made it through the whole thing as the programs haven’t been around for 20 years yet. They could very well get to the end of the 25 years of payments and the then administration can say “Sorry, too late.”
I know of someone age mid-60s who owes more than $200,000 in student loans. His own. He has no intent or desire to pay them back.
From what I was reading online, this dentist has expensive hobbies, a nice house, lavish vacations, etc. So no interest in frugality or even modest lifestyle. I just can’t fathom having this much debt and no concern about repaying it.
Glad to hear the balance forgiven after 25 years will be taxable income.
I guess the flip side is that if he pays nearly $1600/month for 25 years - he has repaid $480,000 - so most of the principal, it’s the interest he is not keeping up with.
“To earn $225k, he needs to be in a very expensive COL area”. No, he lives near Salt Lake City. Orthodontics are expensive everywhere.
The risk he’s got is that limits will be imposed on the amount of loan forgiveness available to any one person. Ironically, by being part of this article, he’s helping to push the political agenda that could lead to that happening. However I do have some sympathy for him in terms of the high interest rates, and USC doesn’t come out looking great, given their propensity for massive tuition price increases.
I know someone in her late 50s who owes at least 500k. She is constantly enrolling in “for profit” schools and knows as soon as she’s finished with school, she has to start paying on the loans. She will never finish school. She was able to buy a townhouse a few years ago, so her lifestyle isn’t suffering. How much does a doctorate in psychology pay, anyway?
Seems like medicine and dentistry are only realistic for those from wealthy generous families, because the debt load is far too high for most others to even want to consider going into them.
But then lots of people do go into medicine and dentistry and start practice with high debt loads. But that means that they must charge a lot (and perhaps engage in ethically dubious upselling) to even have a chance of paying their debt, contributing to the high cost of health care in the US.
Weird that he borrowed more than the COA, unless that amount includes accumulating interest - it looks like the COA is under 500k currently and was presumably quite a bit less than that when he attended.
The problem isn’t the fact of the loans. The problem is in the repayment terms, particularly that the minimum payment is less than the interest - makes zero sense.
There are 4 paths to practicing medicine/dentistry in the United States.
- []Choose parents wisely: Select parents wealthy enough to pay for undergrad and medical school without worrying.
[]The budget way: Realize that students smart enough for medical school can get undergrad merit scholarships at lower level schools, and then choose the in-state medical school, which usually has lower tuition. Without parental support, this will still result in debt, but hopefully a manageable amount.
[]The “Mike Meru” way: Load up on debt, pay what is required, and possibly screw over the taxpayers upon loan forgiveness.
[]The foreign medical degree: Get a medical degree in a foreign country where medical school is much cheaper, get to the US, and pass the required tests.
Of course, most US students only have options #2 and #3. Unwisely, many choose #3.
I couldn’t read the article. The program he is in sounds like it isn’t linked to actual income, because if it was he would probably be paying more. If I was a prospective patient, I wouldn’t use him because I think it’s disgusting to not pay back as much as you can and it sounds like he can afford more.
I graduated school with about the equivalent of $100K in today’s dollars in loans. I paid it all off. I didn’t go on vacation and I scrimped. To me, someone who won’t pay their loans is a thief. I understand that people get sick, etc. and can’t pay and they are not in the same category because most of those people will try to make a payment plan. Guys like this doctor and the townhouse woman damage my faith in humankind.
I think of the person I know with massive student loan debt as a thief.