We need qualified doctors. Some people are abandoning medical school aspirations to be software engineers instead.
Candidates Want to Wipe Student Loan Dept: Is it a Good Idea?
- Thread in 'General' Thread starter Started by americangenius,
- Start date
- 26,467
- 3,560
- Joined
- Mar 29, 2008
agreed
- 6,776
- 4,708
- Joined
- Sep 27, 2003
I agree. But man idk how I’d feel if I went through all that, finally got settled into my career around 40, refinanced my loans, then bam all is forgiven but not for me.
Combine that with the idea of free healthcare and even less reasons to choose a healthcare profession.
- 931
- 357
- Joined
- Apr 28, 2005
I understand your sentiment, however without statistics on this i just can’t agree. They idea is good if the statistical majority is the group in need. If statistically that group makes up only a small portion of the current school debt, then this is a hard no for me. I would also argue that there is some level of irresponsibility in all parties. I remember being able to take out loans waaaay more than my cc tuition, that should have never been allowed. I lived at home and worked so I just paid for it. But I definitely could have balled out. A lot of younger people(colleagues) are choosing to live in high cost areas right now for ok jobs than move to less desirable areas, and get paid more. You don’t have to do it long term, just have a plan in place.
Don’t get me wrong, I’m with change and it’s needed, but this idea at face value is a no for me without more data. A forgiveness plan without regulation moving forward will be a disaster. A forgives plan where the majority is not the professionals you spoke about is a big no. Also, a forgiveness plan without some financial management wealth will just transfer that debt from school to Credit cards and other nuisances.
Don’t get me wrong, I’m with change and it’s needed, but this idea at face value is a no for me without more data. A forgiveness plan without regulation moving forward will be a disaster. A forgives plan where the majority is not the professionals you spoke about is a big no. Also, a forgiveness plan without some financial management wealth will just transfer that debt from school to Credit cards and other nuisances.
- 43,425
- 42,998
- Joined
- Oct 10, 2013
Look how the military bribes people into working for them with school payments. “But ma taxes” “but how will it work??”, it’s already happening
- 15,859
- 3,482
- Joined
- Apr 4, 2006
Yea darn those kids trying to further their education
Nereyda Vuelve Por Dios
formerly DONRE
- 2,910
- 3,134
- Joined
- Jul 22, 2012
I actually think an iteration of this is the best option.
Let the gov forgive some of the debt based on the intrinsic value of the degree and have a program where businesses hire that college kid and they pay of some of the debt where uncle sam would give them tax breaks, subsidies in return.
But yeah schools are financially doing a disservice to their kids. Further diluting the degree they earned.
- 6,776
- 4,708
- Joined
- Sep 27, 2003
Ultimately these kids don’t know what they are signing and it’s all business to the sharks. They/we signed up for it. Maybe better educate them on the aftermath but student loans are a means to an education already. Just plan it out. No one out there making you go to school much less for a liberal art degree you’re really in to.
Tbh school isn’t for everyone. Once you realize you can do just as well without it you’ll save yourself a lot of head and heartache. Dudes out there doing well or better then the college graduate with trade school or straight hustle.
Frustrating as hell when I see new grads out there stunting hard. Nicer whips, lavish vacations, etc when I know for damn sure they’re fine paying the minimum on student loans.
Tbh school isn’t for everyone. Once you realize you can do just as well without it you’ll save yourself a lot of head and heartache. Dudes out there doing well or better then the college graduate with trade school or straight hustle.
Frustrating as hell when I see new grads out there stunting hard. Nicer whips, lavish vacations, etc when I know for damn sure they’re fine paying the minimum on student loans.
- 2,330
- 408
- Joined
- Aug 28, 2003
I’m against this reasoning. Currently in the state of New York, CUNY schools are offering free education to students who qualify.
I myself graduated from a CUNY school and would have been a qualifying student if this was enacted when I graduated HS. My parents did pay for my CUNY education.
Am I jealous of what is currently available to current graduates... sure. But am I retroactively asking for a reimbursement on the education I’ve received.. NO
EDIT
From what I’ve read of Warrens plan, they’re offering loan forgiveness for a 4 year education at your local state college. So for example if it’s 24k then that is what is being reimbursed. I can’t remember if there’s also a GPA sliding scale as well.
My guess is that it’s in the form of a subsidy.. as in when you log in to the federal loan company’s website there’s an option to use the monthly subsidy to pay the loan, where you’re still responsible for the interest incurred.
However your tax rate also increase as what I surmise as the equivalent amount of the actual loan payment unless you’re poor
Last edited:
- 6,776
- 4,708
- Joined
- Sep 27, 2003
Good read if you haven’t read it. Went through the rounds in the medical world with tons of different opinions. Situation is quite common though.
https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975
https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975
- 6,776
- 4,708
- Joined
- Sep 27, 2003
Undergrad sure. But where do you draw the line for grad and doctoral programs?
Most ridiculous thing to me was interest not being tax deductible.
Last edited:
- 2,330
- 408
- Joined
- Aug 28, 2003
You’re gonna have to post the full article, it’s behind a pay wall.
The way I was looking at my loans is a five year plan. If I live on half my salary for five years I can pay off my loan in that period of time.
Problem is benefits and taxes consume 1/3 of my actual yearly salary
Which is what most students do not think about. Then you couple in credit card debt and marriage right after college.. kids..
Trade schools aren’t any better.. unless your trade requires a community college degree. The true problem is that an entry level trade salary is now the same as an entry level salary with a bachelors. Now you have to get your Masters with no true on the job experience.
Really specialized trade schools cost 20k a year and you have to go for 2 years.. unless it is offered at a community college.. Then depending on the trade you have your apprenticeship period.
- 6,776
- 4,708
- Joined
- Sep 27, 2003
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.
He and his wife, Melissa, have become numb to the burden, focused instead on raising their two daughters. “If you thought about it every single day,” Mrs. Meru said, “you’d have a mental breakdown.”
Due to escalating tuition and easy credit, the U.S. has 101 people who owe at least $1 million in federal student loans, according to the Education Department. Five years ago, 14 people owed that much.
More could join that group. While the typical student borrower owes $17,000, the number of those who owe at least $100,000 has risen to around 2.5 million, nearly 6% of the borrowing pool, Education Department data show.
Pricest Professions
*Nonprofit
Sources: Urban Institute (degrees); American Dental Association (dental school tuition)
For graduate-school students especially, there is little incentive for universities to help put the brakes on big borrowing. The government essentially allows grad students to borrow any amount to cover tuition and living costs, with few guardrails on how the final sum will be repaid.
More than a third of borrowers from one of the government’s main graduate school lending programs have enrolled in some form of federal loan-forgiveness plan.
“These are choices. We’re not coercing,” said Avishai Sadan, dean of USC’s Herman Ostrow School of Dentistry, where Mr. Meru went to school and one of the most expensive in the U.S. “You know exactly what you’re getting into.”
Even the best planners might not have anticipated the sharp increases in tuition and student-loan interest rates from 2005 to 2012, Mr. Meru’s tenure as a student. While the Federal Reserve was reducing interest rates to near zero to combat the recession, rates for grad students were as high as 8.5%.
Dental school is the costliest higher-education program in the U.S. Private nonprofit schools during the 2015-2016 school year charged an average of $71,820 a year, the Urban Institute found. The USC program now costs $91,000 a year, and $137,000 when living expenses are included.
For Mr. Meru, tuition at USC first went up during his second year. Interest rates followed. Halfway through dental school, he said, he started to worry about the soaring cost of his education.
“I’m sitting here saying, ‘Holy crap! Should I really be doing this?’ ” Mr. Meru recalled. “ ‘Should I drop out?’ ”
Mrs. Meru, 35, said she and her husband decided it was too late to turn back. If he quit or transferred to a cheaper school, he still owed for the loans he had already taken.
Mr. Meru’s financial records—provided to The Wall Street Journal—show he borrowed $601,506, a debt that swelled to more than $1 million by fees and interest.
The Million-Dollar Orthodontist's Bill
Mike Meru took out $601,506 in student loans to become an orthodontist at the University of Southern California. With interest accumulating at the rate of about $130 a day, his debt continues to grow past $1 million. He has repaid $39,000 since consolidating his many student loans in 2015.
Note: As of May 6. Subsidized loans do not accrue interest until the borrower enters the payback period; unsubsidized loans accrue interest from when they are originated.
Source: Mr. Meru's student loan records
The USC education helped Mr. Meru earn $225,000 last year working for a corporate practice in Draper, Utah, 20 minutes from Salt Lake City. That compares with a $158,000 median income for dentists, according to the Labor Department.
Mr. Meru became so frustrated with the high interest rates that he helped start a national dental-student movement to lobby Congress to lower rates on grad students. The effort went nowhere.
Some dental school educators fear that the eye-popping costs to enter the profession could dissuade good prospects from even trying.
“I don’t think you’ll find any dental school dean in the country who will not tell you they’re concerned about the cost,” said Dr. Sadan, of USC. “But what’s the action?”
Debt free
Mr. Meru, a lean 6-foot-7, was the eldest of three boys raised in Newbury Park, Calif., an affluent suburb west of Los Angeles. His father, who didn’t finish college, owns a small construction business. His mother, a college graduate, worked mostly as a secretary.
Mr. Meru found his calling while still a teenager. He was insecure over his crooked teeth and an irregular jaw line, he said: “I was embarrassed to talk to girls. Orthodontics changed my life.”
After high school, Mr. Meru, who is Mormon, spent two years on a mission in Brazil, then returned to the U.S. to complete his undergraduate degree at Brigham Young University in Utah. He paid his college tuition with money from his parents and by waiting tables at the Old Spaghetti Factory near the school’s Provo campus.
Helping pay for college was “the agreement we made all our boys,” his mother, Karen Meru, said. Graduate school wasn’t part of the deal. “We couldn’t afford it,” she said. “We’re middle class.”
Mike Meru hikes with his wife, Melissa, and their daughters, Elle, left, and Emme, near their home in Draper, Utah. PHOTO: BENJAMIN ZACK FOR THE WALL STREET JOURNAL
Mr. Meru met and married his wife while at Brigham Young, and he graduated debt-free in 2005. He picked the USC dental school for its prestige and because he wanted to live closer to his parents.
Mr. Meru said the dental school’s financial-aid director, Sergio Estavillo, estimated that the basic four-year program would require $400,000 to $450,000 in student debt, including interest. Mr. Estavillo said he didn’t recall the conversation but had no reason to doubt its accuracy.
Mr. Meru and his wife concluded dental school was a good investment, given the salary he expected to earn.
“We’re like, ‘Well, we can make this work,’” Mrs. Meru said. “There are certain things that are OK to go into debt for: a house, an education, a car.”
The newlyweds packed up for California. Mrs. Meru got a job at USC as an administrative assistant, which provided a tuition discount.
Higher Costs for Higher EdAverage annual borrowing for tuition by graduatestudents, undergraduates and parents ofundergrads
UndergradGrad studentParent1970’80’902000’1005,00010,00015,00020,000$25,000
The couple’s calculations were partly based on low interest rates the federal government set for students at the time. In the 2004-2005 school year, the rate for college and graduate students was 2.77%.
The following school year, Mr. Meru’s first at USC, rates jumped to 4.75% for his loans. Those turned out to be the cheapest of the 50 loans he needed to finance his education. Unlike consumer loans for cars or homes, college students typically take out multiple loans each year—often at different interest rates, depending on what is available.
USC charged tuition of $56,757 in Mr. Meru’s first year, American Dental Association records show. To save on expenses, the couple lived with his parents. He drove a Buick inherited from his wife’s grandmother for the hour-plus trip between Newbury Park and USC, located south of downtown Los Angeles. After his first year, and with his wife’s tuition discount, he owed $43,976.
By Mr. Meru’s second year, the interest rate on new student loans jumped to 6.8%, and USC raised its tuition by 6%. By the end of that school year, he had taken out a total of $115,000 in loans, which also covered a summer semester. Interest rates were roughly triple what he had planned for.
A law passed by Congress in 2001, which took effect in 2006, severed the link that tethered student-loan interest rates to Treasury rates. Lawmakers were under pressure to lower costs for undergraduates, in the form of grants and lower loan rates. They didn’t provide similar relief for grad students.
During Mr. Meru’s third year of dental school, USC raised its tuition another 6%, and he had accumulated about $230,000 in loans, not counting interest.
Mike Meru, left, reviews a photo of patient Justin Joyce's mouth with the boy’s mother, Kris Joyce, during an orthodontics appointment this week. PHOTO: BENJAMIN ZACK FOR THE WALL STREET JOURNAL
Dr. Sadan, the dean, said the USC dental school raised tuition to cover the cost of delivering a top education. “You cannot decide you’re just not raising tuition,” he said. “Everything that drives the operation, from salary raises to any other additional costs, have to come, for the most part, from tuition.”
Mr. Estavillo, the financial-aid director, emailed Mr. Meru a flier from a dental association in 2007 that warned of large debt balances. It encouraged students to cut back on rent and lattes.
Great Lakes Higher Education Corp., which serviced Mr. Meru’s loans, sent him an email warning how quickly interest builds while in school. “If you can afford interest payments,” the email said, “it’s a good idea to make them.”
Giving grace
Most of Mr. Meru’s debt came from Grad Plus, a program created by Congress in 2005. It removed loan limits and allowed grad students to borrow for any expense, including rent and other living costs. The law, signed by President George W. Bush, was intended to ease student reliance on private banks, which had more strict repayment plans.
TIPS FOR REPAYING STUDENT LOANS AHEAD OF SCHEDULE
One luxury was buying a used Mercedes-Benz, which carried a monthly payment of $390. Beyond that, Mr. Meru said, the couple restrained their spending. For fun, they went camping.
Mr. Meru said he spent 40 hours a week at school. He reserved evenings for studying and helping care for his young family, which left no time for a job.
By the spring of 2009, the end of his fourth year, Mr. Meru’s loans had reached about $340,000, still in line with the original estimates from the financial-aid director. That would change as he chased his dream.
After graduating from dental school that spring, Mr. Meru began orthodontics. Unlike doctors, who usually are paid to perform residencies at hospitals, dental specialists often perform their residency at universities that charge tuition.
For the next three years, Mr. Meru continued his studies at USC, and continued to borrow for tuition. Of his growing debt, he said, “I just wouldn’t look. The only thing looking did was create stress.”
After finishing the orthodontics residency in 2012, Mr. Meru used a government option known as forbearance, which allows borrowers to postpone payments. Mr. Meru said he earned little his first year out of school and needed all of it to support his family. Interest continued to accrue, expanding his debt through the magic of compounding.
The couple bought a home in Draper in 2012, using a $400,000 mortgage that Mrs. Meru took out in her name. She used an inheritance from her grandmother for the down payment. Her mother cosigned the loan.
Mike Meru catches his younger daughter, Emme, 5 years old. PHOTO: BENJAMIN ZACK FOR THE WALL STREET JOURNAL
Mr. Meru then entered into a government-sponsored repayment plan based on income. He agreed to monthly payments at 10% of his discretionary income, defined as adjusted gross income minus 150% of the poverty level. Any balance remaining after 25 years is forgiven, effectively covered by taxpayers. The forgiven amount is then taxed as ordinary income.
Without the government help, Mr. Meru’s monthly payment would be $10,541.91, according to an email from his loan servicer. His current monthly income, after taxes, is roughly $13,333.
Since refinancing his debt with the federal government in 2015, lowering the rate to 7.25%, Mr. Meru’s balance has grown by $148,948. It will keep growing through the 25-year life of the repayment plan until it reaches $2 million. That sum will be forgiven and, at current tax rates, could cost Mr. Meru more than $700,000 in income tax payments.
Head of the Class
The number of students graduating each year with six-figure student-loan debt
Note: For academic years ending year shown
Source: Analysis of Department of Education data by Mark Kantrowitz, financial-aid expert
By then, Mr. Meru will have paid $1.6 million. That would be about the same as repaying his $600,000 in student loans at a rate of 4% over 25 years, said Jason Delisle, a student-loan expert with the American Enterprise Institute, a conservative think tank. The biggest factor in Mr. Meru’s runaway debt, he said, was a high principal combined with long periods when Mr. Meru made no payments.
The government repayment plan affords the Meru family a comfortable life. Their home is on a mountain with panoramic views of the snow-capped peaks surrounding Salt Lake City. They take vacations, including a recent trip to Havana. He drives a used Tesla.
On a recent spring day he commuted to the suburb of Clinton, working out of one of his company’s five offices. In a room with views of the mountains and the strip mall parking lot, he saw a procession of teenage patients. For lunch, he went to the Panda Express next door.
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.
He and his wife, Melissa, have become numb to the burden, focused instead on raising their two daughters. “If you thought about it every single day,” Mrs. Meru said, “you’d have a mental breakdown.”
Due to escalating tuition and easy credit, the U.S. has 101 people who owe at least $1 million in federal student loans, according to the Education Department. Five years ago, 14 people owed that much.
More could join that group. While the typical student borrower owes $17,000, the number of those who owe at least $100,000 has risen to around 2.5 million, nearly 6% of the borrowing pool, Education Department data show.
Pricest Professions
*Nonprofit
Sources: Urban Institute (degrees); American Dental Association (dental school tuition)
For graduate-school students especially, there is little incentive for universities to help put the brakes on big borrowing. The government essentially allows grad students to borrow any amount to cover tuition and living costs, with few guardrails on how the final sum will be repaid.
More than a third of borrowers from one of the government’s main graduate school lending programs have enrolled in some form of federal loan-forgiveness plan.
“These are choices. We’re not coercing,” said Avishai Sadan, dean of USC’s Herman Ostrow School of Dentistry, where Mr. Meru went to school and one of the most expensive in the U.S. “You know exactly what you’re getting into.”
Even the best planners might not have anticipated the sharp increases in tuition and student-loan interest rates from 2005 to 2012, Mr. Meru’s tenure as a student. While the Federal Reserve was reducing interest rates to near zero to combat the recession, rates for grad students were as high as 8.5%.
Dental school is the costliest higher-education program in the U.S. Private nonprofit schools during the 2015-2016 school year charged an average of $71,820 a year, the Urban Institute found. The USC program now costs $91,000 a year, and $137,000 when living expenses are included.
For Mr. Meru, tuition at USC first went up during his second year. Interest rates followed. Halfway through dental school, he said, he started to worry about the soaring cost of his education.
“I’m sitting here saying, ‘Holy crap! Should I really be doing this?’ ” Mr. Meru recalled. “ ‘Should I drop out?’ ”
Mrs. Meru, 35, said she and her husband decided it was too late to turn back. If he quit or transferred to a cheaper school, he still owed for the loans he had already taken.
Mr. Meru’s financial records—provided to The Wall Street Journal—show he borrowed $601,506, a debt that swelled to more than $1 million by fees and interest.
The Million-Dollar Orthodontist's Bill
Mike Meru took out $601,506 in student loans to become an orthodontist at the University of Southern California. With interest accumulating at the rate of about $130 a day, his debt continues to grow past $1 million. He has repaid $39,000 since consolidating his many student loans in 2015.
Note: As of May 6. Subsidized loans do not accrue interest until the borrower enters the payback period; unsubsidized loans accrue interest from when they are originated.
Source: Mr. Meru's student loan records
The USC education helped Mr. Meru earn $225,000 last year working for a corporate practice in Draper, Utah, 20 minutes from Salt Lake City. That compares with a $158,000 median income for dentists, according to the Labor Department.
Mr. Meru became so frustrated with the high interest rates that he helped start a national dental-student movement to lobby Congress to lower rates on grad students. The effort went nowhere.
Some dental school educators fear that the eye-popping costs to enter the profession could dissuade good prospects from even trying.
“I don’t think you’ll find any dental school dean in the country who will not tell you they’re concerned about the cost,” said Dr. Sadan, of USC. “But what’s the action?”
Debt free
Mr. Meru, a lean 6-foot-7, was the eldest of three boys raised in Newbury Park, Calif., an affluent suburb west of Los Angeles. His father, who didn’t finish college, owns a small construction business. His mother, a college graduate, worked mostly as a secretary.
Mr. Meru found his calling while still a teenager. He was insecure over his crooked teeth and an irregular jaw line, he said: “I was embarrassed to talk to girls. Orthodontics changed my life.”
After high school, Mr. Meru, who is Mormon, spent two years on a mission in Brazil, then returned to the U.S. to complete his undergraduate degree at Brigham Young University in Utah. He paid his college tuition with money from his parents and by waiting tables at the Old Spaghetti Factory near the school’s Provo campus.
Helping pay for college was “the agreement we made all our boys,” his mother, Karen Meru, said. Graduate school wasn’t part of the deal. “We couldn’t afford it,” she said. “We’re middle class.”
Mike Meru hikes with his wife, Melissa, and their daughters, Elle, left, and Emme, near their home in Draper, Utah. PHOTO: BENJAMIN ZACK FOR THE WALL STREET JOURNAL
Mr. Meru met and married his wife while at Brigham Young, and he graduated debt-free in 2005. He picked the USC dental school for its prestige and because he wanted to live closer to his parents.
Mr. Meru said the dental school’s financial-aid director, Sergio Estavillo, estimated that the basic four-year program would require $400,000 to $450,000 in student debt, including interest. Mr. Estavillo said he didn’t recall the conversation but had no reason to doubt its accuracy.
Mr. Meru and his wife concluded dental school was a good investment, given the salary he expected to earn.
“We’re like, ‘Well, we can make this work,’” Mrs. Meru said. “There are certain things that are OK to go into debt for: a house, an education, a car.”
The newlyweds packed up for California. Mrs. Meru got a job at USC as an administrative assistant, which provided a tuition discount.
Higher Costs for Higher EdAverage annual borrowing for tuition by graduatestudents, undergraduates and parents ofundergrads
UndergradGrad studentParent1970’80’902000’1005,00010,00015,00020,000$25,000
The couple’s calculations were partly based on low interest rates the federal government set for students at the time. In the 2004-2005 school year, the rate for college and graduate students was 2.77%.
The following school year, Mr. Meru’s first at USC, rates jumped to 4.75% for his loans. Those turned out to be the cheapest of the 50 loans he needed to finance his education. Unlike consumer loans for cars or homes, college students typically take out multiple loans each year—often at different interest rates, depending on what is available.
USC charged tuition of $56,757 in Mr. Meru’s first year, American Dental Association records show. To save on expenses, the couple lived with his parents. He drove a Buick inherited from his wife’s grandmother for the hour-plus trip between Newbury Park and USC, located south of downtown Los Angeles. After his first year, and with his wife’s tuition discount, he owed $43,976.
By Mr. Meru’s second year, the interest rate on new student loans jumped to 6.8%, and USC raised its tuition by 6%. By the end of that school year, he had taken out a total of $115,000 in loans, which also covered a summer semester. Interest rates were roughly triple what he had planned for.
A law passed by Congress in 2001, which took effect in 2006, severed the link that tethered student-loan interest rates to Treasury rates. Lawmakers were under pressure to lower costs for undergraduates, in the form of grants and lower loan rates. They didn’t provide similar relief for grad students.
During Mr. Meru’s third year of dental school, USC raised its tuition another 6%, and he had accumulated about $230,000 in loans, not counting interest.
Mike Meru, left, reviews a photo of patient Justin Joyce's mouth with the boy’s mother, Kris Joyce, during an orthodontics appointment this week. PHOTO: BENJAMIN ZACK FOR THE WALL STREET JOURNAL
Dr. Sadan, the dean, said the USC dental school raised tuition to cover the cost of delivering a top education. “You cannot decide you’re just not raising tuition,” he said. “Everything that drives the operation, from salary raises to any other additional costs, have to come, for the most part, from tuition.”
Mr. Estavillo, the financial-aid director, emailed Mr. Meru a flier from a dental association in 2007 that warned of large debt balances. It encouraged students to cut back on rent and lattes.
Great Lakes Higher Education Corp., which serviced Mr. Meru’s loans, sent him an email warning how quickly interest builds while in school. “If you can afford interest payments,” the email said, “it’s a good idea to make them.”
Giving grace
Most of Mr. Meru’s debt came from Grad Plus, a program created by Congress in 2005. It removed loan limits and allowed grad students to borrow for any expense, including rent and other living costs. The law, signed by President George W. Bush, was intended to ease student reliance on private banks, which had more strict repayment plans.
TIPS FOR REPAYING STUDENT LOANS AHEAD OF SCHEDULE
- Borrow only what you need
- Choose your repayment plan carefully
- Make payments while in school, if you are able
- Make extra payments when you can
- Enroll in automatic debit
One luxury was buying a used Mercedes-Benz, which carried a monthly payment of $390. Beyond that, Mr. Meru said, the couple restrained their spending. For fun, they went camping.
Mr. Meru said he spent 40 hours a week at school. He reserved evenings for studying and helping care for his young family, which left no time for a job.
By the spring of 2009, the end of his fourth year, Mr. Meru’s loans had reached about $340,000, still in line with the original estimates from the financial-aid director. That would change as he chased his dream.
After graduating from dental school that spring, Mr. Meru began orthodontics. Unlike doctors, who usually are paid to perform residencies at hospitals, dental specialists often perform their residency at universities that charge tuition.
For the next three years, Mr. Meru continued his studies at USC, and continued to borrow for tuition. Of his growing debt, he said, “I just wouldn’t look. The only thing looking did was create stress.”
After finishing the orthodontics residency in 2012, Mr. Meru used a government option known as forbearance, which allows borrowers to postpone payments. Mr. Meru said he earned little his first year out of school and needed all of it to support his family. Interest continued to accrue, expanding his debt through the magic of compounding.
The couple bought a home in Draper in 2012, using a $400,000 mortgage that Mrs. Meru took out in her name. She used an inheritance from her grandmother for the down payment. Her mother cosigned the loan.
Mike Meru catches his younger daughter, Emme, 5 years old. PHOTO: BENJAMIN ZACK FOR THE WALL STREET JOURNAL
Mr. Meru then entered into a government-sponsored repayment plan based on income. He agreed to monthly payments at 10% of his discretionary income, defined as adjusted gross income minus 150% of the poverty level. Any balance remaining after 25 years is forgiven, effectively covered by taxpayers. The forgiven amount is then taxed as ordinary income.
Without the government help, Mr. Meru’s monthly payment would be $10,541.91, according to an email from his loan servicer. His current monthly income, after taxes, is roughly $13,333.
Since refinancing his debt with the federal government in 2015, lowering the rate to 7.25%, Mr. Meru’s balance has grown by $148,948. It will keep growing through the 25-year life of the repayment plan until it reaches $2 million. That sum will be forgiven and, at current tax rates, could cost Mr. Meru more than $700,000 in income tax payments.
Head of the Class
The number of students graduating each year with six-figure student-loan debt
Note: For academic years ending year shown
Source: Analysis of Department of Education data by Mark Kantrowitz, financial-aid expert
By then, Mr. Meru will have paid $1.6 million. That would be about the same as repaying his $600,000 in student loans at a rate of 4% over 25 years, said Jason Delisle, a student-loan expert with the American Enterprise Institute, a conservative think tank. The biggest factor in Mr. Meru’s runaway debt, he said, was a high principal combined with long periods when Mr. Meru made no payments.
The government repayment plan affords the Meru family a comfortable life. Their home is on a mountain with panoramic views of the snow-capped peaks surrounding Salt Lake City. They take vacations, including a recent trip to Havana. He drives a used Tesla.
On a recent spring day he commuted to the suburb of Clinton, working out of one of his company’s five offices. In a room with views of the mountains and the strip mall parking lot, he saw a procession of teenage patients. For lunch, he went to the Panda Express next door.
- 6,776
- 4,708
- Joined
- Sep 27, 2003
Copy pasted.
Not sure if it translate the same. But tbh college ain’t for everyone and add in Private schools or “Prestigious” schools ain’t the wave. In medicine or healthcare I’m more of a go somewhere to get you into the next step (med school, etc). No reason why this guy should have went to USC (because he wanted to, etc) where cost is more then double other programs. Now we gotta bail him (and many others) out because they CHOSE a certain school?
Not sure if it translate the same. But tbh college ain’t for everyone and add in Private schools or “Prestigious” schools ain’t the wave. In medicine or healthcare I’m more of a go somewhere to get you into the next step (med school, etc). No reason why this guy should have went to USC (because he wanted to, etc) where cost is more then double other programs. Now we gotta bail him (and many others) out because they CHOSE a certain school?
- 931
- 357
- Joined
- Apr 28, 2005
1000% with you on this, suckers are born every day. Could have gone else were for that type of money, and I do feel bad for him, however I’m not willing to use my tax money to help this person out. I’m willing to vote with regulation that will prevent this type of thing.
- 25,613
- 46,094
- Joined
- Jan 30, 2010
Y’all gotta see the finesse that the country been running ...since the 50’s it’s been programmed that to be “normal” graduate high school, straight to college and a family ...then a majority of jobs require any type of college degree just to get in the door...u don’t think ppl gon go anywhere they can n get whatever degree they could get to live up to this ? ...the gov got this messed up something crazy
- 25,979
- 19,198
- Joined
- Aug 10, 2003
- 931
- 357
- Joined
- Apr 28, 2005
@ the union. That’s who fights for them.@ the pigs
- 6,776
- 4,708
- Joined
- Sep 27, 2003
Good ole American dream and constant keeping up the Jones’.
My kids going here. How about yours? Vicious cycle.
- 21,501
- 12,282
- Joined
- Oct 10, 2005
- 30,175
- 40,397
- Joined
- May 25, 2004
If you aren’t gonna wipe them out at least let them be paid back at 0% interest and apply all the prior interest paid to the principal.
- 43,425
- 42,998
- Joined
- Oct 10, 2013
THIS is where the discussion needs to truly begin. This can determine if payments are even worth it or if you should just eat the bankruptcy lol
- 30,175
- 40,397
- Joined
- May 25, 2004
Exactly.
We all know student loans aren’t getting dropped anyways. It’s gonna be easier to pass the no interest thing than just bailing out the students.
So yeah if you still got 200k to pay back go ahead and file for bankruptcy.
- 16,477
- 20,733
- Joined
- Aug 5, 2007
my wife’s best friend became an official MD last year. zero college debt. she’s part hawaiian and she got full scholarships to pay for her school
- 6,776
- 4,708
- Joined
- Sep 27, 2003
Bankruptcy doesn’t absolve student loan debt.
