In late May, the Wall Street Journal published an article detailing the financial troubles of Dr. Mike Meru. In short, Mike Meru is an orthodontist practicing in Utah who owes more than $1 million in student loans. Yes, you read that right! As a fellow orthodontist, I appreciate his willingness to share so much about his financial life with the public. This is something that many people would never do, no matter their line of work. However, this article brought to the forefront a number of difficult issues uniquely facing the current generation of student borrowers. After all, who is to blame for his $1 million student loan debt?
How much does Mike Meru owe exactly?
Before we begin, I’ll briefly summarize Mike Meru’s financial situation. As of May 2018 his student loans totaled $1,060,945.42. His monthly payments of $1,589.97 (10% of his discretionary income) do not even cover the interest on his loans. In twenty years, his estimated loan balance will be $2 million. He is part of a federal loan forgiveness program where his unpaid debt will be entirely forgiven after 25 years. However, he would bear a tax burden of approximately $700,000 in income tax payments after the 25-year repayment plan ends.
Sounds crazy, right? Not surprisingly, there are a number of other dentists and healthcare professionals in a similar situation as his. Just look at the latest results of my poll on the right. As I previously wrote, it costs a million dollars to become an orthodontist, and the proof is in the pudding with Mike Meru.
The good, the bad, and the ugly
Let’s start with the good and what Mike Meru did right. He graduated debt-free from undergrad, partially from his parents’ assistance and also from his time waiting tables. Kudos to him.
Now for the bad. He chose to attend the most expensive dental school in the United States, USC. Choices. During his time there, USC raised its tuition 6% annually, and interest rates on new student loans jumped from 2.77% to 6.8%.
And the ugly? He bought a used Mercedes while in dental school. Choices. He attended USC for his orthodontics residency where he had to shell out even more tuition, although there are other programs that charge no tuition. Choices. And now, despite owing more than $1 million, he and his family regularly take vacations, even abroad. Oh, and he now drives a used Tesla. Choices.
Where do we go from here?
Not surprisingly, many people are not entirely sympathetic with him. Many of my colleagues and I agree that he made a number of dumb financial decisions. At best, he is an irresponsible borrower who did not know what he was getting himself into with dental school and residency. (Doubtful, but possible). At worst, he is a wily opportunist who gamed the system, is living a good life, and relying on taxpayer relief. (Extreme, but not far-fetched).
Equally complicit are those dental schools that keep on hiking tuition year after year, knowing all too well that their naive students can borrow as much money as they want from the government with essentially no limit. Pre-dents, take note. More to come soon on this later.
What are your thoughts?
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