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Mike Meru Has $1M in Student Loans. How Did That Happen?
- jbob2000 8y ago> 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 Cry me a river, you're making bank, bud.
- crankylinuxuser 8y agoAnd for every rich person, there's 19 more that got screwed one way or another with scholastic loans. The last major age generation (the ones who are in their 50's to 60's) pulled the ladder up on us millenials. Ive heard the stories that college education in the '60s and '70s were affordable to the point that a summer job would cover 100% of the expenses. Instead, I ended up in $30k in debt. The debt is a fact of life. And so is the likelihood that social security will not be there when/if I retire. The age keeps moving up and up, which is a form of generational theft. Next time, try depersonalizing these types of articles. The problem of higher ed debt is a scary $1 trillion behemoth with no end in sight. When that bubble bursts, we all should worry.
- 226jg5 8y agoMy wife accumulated about 30k in debt, through EducationOne. It was guaranteed through TERI. We chose a private lender specifically because at the time (early 2000s) private loans were dischargeable in bankruptcy and we wanted a hedge against the possibility that she might fail in her career. We accepted a significantly higher interest rate for that reason alone. They changed the law and now they're not dischargeable. Luckily, TERI itself filed for bankruptcy and didn't keep good records. They'd sold the loans but the records showing assignment to the new entity apparently don't exist. We stopped paying on them, they filed suit, and we demanded that they prove ownership of the debt. They withdrew the suit, and the statute of limitations has since expired.
- SolarNet 8y agoThen these articles should use a range of people who have actual problems rather than a single person (whose name is in the title! can't get more personal than that) who is being an idiot. You aren't wrong, but this article is worse.
- waytooyahoo 8y agoIt is true that the boomers got a sweet deal. For instance, the Cal State schools were free until then Gov Reagan instituted tuition in the mid-70s. I think this guy is a grifter just taking advantage of a system that rewards grifters. Sheesh, I wish I could afford EXTREME sports.
- Overtonwindow 8y agoWow. A little research shows a home worth nearly a million.
- sdhgaiojfsa 8y agoIn Utah. Not exactly an HCOL state. That must be a mansion. Here's what a $400k home in Draper looks like[1]. That was the size of their mortgage. This person does not have a debt problem. They have a spending problem. [1]: https://www.zillow.com/homes/for_sale/Draper-UT/pmf,pf_pt/69724182_zpid/42464_rid/3-_beds/375000-425000_price/1500-1700_mp/globalrelevanceex_sort/40.602353,-111.700058,40.385651,-111.988106_rect/11_zm/ https://www.zillow.com/homes/for_sale/Draper-UT/pmf,pf_pt/69...
- timewarrior 8y agoI agree. He bought a used Mercedes for 390/mo while in college and not paying loans. What was wrong with having a used Toyota Camry for 8k?
- awat 8y agoIt’s also not a low cost of living state either (not SV but not the midwest). That’s a $400K townhome with shared walls on both sides and a $225 HOA. Here is a milion dollar detached home in that area: https://www.zillow.com/homedetails/934-E-Crosswind-Way-Draper-UT-84020/61172256_zpid/ https://www.zillow.com/homedetails/934-E-Crosswind-Way-Drape...
- sdhgaiojfsa 8y agoThat house is freaking HUGE. Nobody needs 5,500 sqft.
- awat 8y agoI don’t disagree at all on the size but I wouldn’t classify it as a mansion just a big house. As a Utahn who works remotely with lots of people from the coasts. I feel its my duty to mention Utah isn’t as cheap as they think it is ha.
- sulam 8y agoIt's amazing he's only paying back $1600ish a month on that kind of income. As far as crying a river goes, I wonder what that's done to his credit rating... Seems like it would be in the toilet from debt to income ratio.
- distances 8y agoHow does the US stay competitive with these salaries? In most of Europe it's very rare to make over 100k, and exceedingly rare to have a salary over 200k. As a counterbalance the employer side costs are larger of course, but I would assume the employer total cost difference is considerable anyway.
- dentista18 8y ago$225k/yr really isn't that great for an orthodontist. As a new grad general dentist, my salary is not too far off from that
- Overtonwindow 8y agoThis is a really huge issue but I think one critical component should be how much the university can charge you once you’ve enrolled. I think the university should be restricted from increasing your tuition after enrollment. It should stay the same through graduation, and no additional fees or anything can be added. You’re willing to make a commitment to the school, they should be willing to make a commitment to you.
- sesteel 8y agoI concur; that is a great.
- mal10c 8y agoI agree that would be nice, but wouldn't the college/university forecast the estimated cost of tuition over the next 4 years, and factor in an estimated inflation amount? Then they would evenly divide the result. I guess my point is, I don't think it would save the student any money. But I could be wrong, what do you think?
- LyndsySimon 8y agoI recall reading that some schools are starting to offer this sort of cost guarantee.
- wtvanhest 8y agoOne thing the article didn't mention, that would be interesting to consider is the inflation rate of tuition from the time he was 17 until the time he graduated. I'm estimating based on other research that it was likely between 8%-10%. That means the cost of his education would be roughly 50% more than he originally expected. Factor to multiply cost is 2.2 =(1.09^9) Figure it was increasing at a steady state so you could split the difference. Even if he had looked at salaries originally, then backed in to the price using normal (not education) inflation, he would have dramatically underestimated his exit cost.
- sdhgaiojfsa 8y agoI do not feel a whit of sympathy for this guy. He can afford to pay, but he doesn't. That's why his debt is so high. If he had left his loans unconsolidated and made aggressive payments, he'd be a good deal down the road toward fixing his debt situation. Instead, he seems intent on allowing it to grow as large as possible. (Edit: I'll note that it's just like the WSJ to pick the least sympathetic possible face of a real social problem that probably ought to see some government action to fix.)
- spelunker 8y agoAgreed. He also made some frankly bad financial choices along the way: Taking out student loans to pay for the $1,800/month apartment they were renting, putting off paying the loans for a year+ while the interest accrued, buying a house while still having all this debt so that they could "live comfortably", etc. Dental school is expensive, I get it. He wouldn't have to be here if he made some better financial decisions though. In the end it's going to be the taxpayers taking the hit, however - apparently he's part of a program that will forgive the debt in 25 years.
- deleted 8y ago[deleted]
- iaw 8y agoSo, he borrows $600K to attend 7 years of school starting at age 24 and he makes $225K now at age 37 with 2 children and a $1M debt that he only pays $1600/month on? Doesn't he take home in the ball park of $10k/month?
- garmaine 8y agoAnd? He has cost of living expenses. I'm impressed he's able to pay $1600/mo.
- IanCal 8y agoIs having expenses under $8400 per month particularly impressive?
- deleted 8y ago[deleted]
- foepys 8y agoThis comment is reeking of Silicon Valley. There are a lot of Americans making $20,000 or less per year.
- batbomb 8y agoSalt Lake isn't that expensive.
- IncRnd 8y agoHe lives in Utah.
- asdsa5325 8y agoHe takes in 12k/mo and you are surprised he can pay 1.6k/mo? Did you not think that through?
- qop 8y agoYeah, so 16% of his income is a pretty sizable chunk for something like loan payback, considering most people making around that are paying probably 30% for rent or mortgage, and then there are car payments or transit costs, kids, life expenses... The purpose of a student loan is to finance an education, not to enslave a person trying to better themselves and lock up all their income just to satisfy greedy banks. One of my coworkers (younger fellow, 28-29 or something) has a six digit loan and pays 700-something a month, which is around 20% of what he most likely makes. He doesn't have any kids though, so he can afford to overpay like that, for now. student loans are a shark industry in america, idc what anybody says. Preying on the people in society attempting to be the most productive, it's awful. That the guy in tfa has a medium-to-high income shouldn't really matter. The student loan should be a tool of utility for the learner, not a tool of profit maximization for the bank.
- kerng 8y agoGuy earned $225,000 last year- sounds like he is willingly not paying back. Amazing how some people get away with that!
- rokhayakebe 8y agoYou borrow $600,000 to pursue you dream education. You earn more money than 95% of all Americans. You live in a "seemingly" nice neighborhood in a home that costs $400,000. And then you are a victim.
- selimthegrim 8y agoMy high school friend who knows him professionally claims he spends a lot of time putting skiing videos on Instagram and even has sponsors. Maybe he should hit them up.
- chasing 8y agoI'm honestly surprised there are only 101 people in this sort of situation. And this guy, frankly, doesn't seem to be doing that bad. Big debt, but controlled such that he seems to otherwise have a nice home, happy family, good business, etc.
- CamelCaseName 8y agoDoes anyone have a non-paywall link? Fullwsj is not working for me.
- AdamM12 8y agoGoogle the article title.
- awat 8y agoI’m familiar with the suburb that Mr. Meru lives in. Moving 20 minutes in any direction would free up substantial capital for him to pay his debts on a 225K salary (particularly because real estate is red hot in Utah at the moment probably also equity to be had on his 750k+ house).
- onowahoo 8y agoWhy should he pay it back? He wanted leverage, they are giving him leverage. He wants to take a flier on a home that could appreciate significantly. That's the risk when you make a loan.
- sykh 8y agoMy wife has $4000,000 med school loans. We are on PSLF and payments are 10% of (adjusted gross income minus 150% fed poverty line). She’s an attending now and we do everything we can to decrease our adjusted gross income. Our payments do not cover interest on the loans. The balance increases each month. In 8 years, if everything goes according to plan, her loans will be forgiven and be near $600,000. It’d be a lot more cost effective for society to just offer free med school and lower doctors’ wages. But our society has opted for inefficiency. Her large doctor salary is necessary to pay for her schooling but when the loans are paid off her salary won’t decline.
- riahi 8y agoWhy did her time in residency not count toward pslf?
- sykh 8y agoIt should have but she wasn’t aware of the program until after we met. I researched her options and PSLF is the best one. She works at a Hospital and thus has qualifying employment.
- riahi 8y agoUnless she wasn't on an appropriate payment plan during residency, that time still counts. I'd look into it.
- nraynaud 8y agogoing from a world of fixed costs and variable income to a tar pit of proportional costs everywhere: tuition proportional to future earnings, SAAS software, monthly fee at the bank, hard to break leases (eating a part of the increase in salary you will make by moving).
- pooya13 8y agoI don't see how the fact that this guy is making a lot of money now is relevant. The ultra high cost of education creates a huge gap between people who are born into rich families and can afford a $1M price tag and ones who aren't and would need to pay loans for decades after they finish school. (That is if like this guy, they are lucky enough and can land a good paying job, which isn't always the case)
- IncRnd 8y agoHis income is entirely relevant, because he is able to pay back the loans but chooses not to pay them back.
- Hasz 8y agoGuy is using a government loan forgiveness program. He'll pay "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." Don't get me wrong, dental school is stupid expensive (forecast from USC was ~450k) but this guy has the financial acumen of a brick. You don't buy a new house, Tesla, and take vacations to Havana with that much debt, while simultaneously pushing the burden for your schooling onto everyone else. https://www.fullwsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975 https://www.fullwsj.com/articles/mike-meru-has-1-million-in-...
- Harvey-Specter 8y ago> this guy has the financial acumen of a brick Sounds like he's doing the smart thing at this point, doesn't it? He borrowed over $600,000. By the end of the 25 year period he'll likely have paid back less than the original principal.
- Hasz 8y agoFrom the article "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. 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."
- Harvey-Specter 8y agoI don't have access to the full article, but > lowering the rate to 7.25% > repaying his $600,000 in student loans at a rate of 4% These two things don't jive. Did he have the option of a loan at 4% at some point?
- decebalus1 8y agoThe amount of self-righteousness in this thread is amazing. Seriously, who cares how much money he currently makes? He's making bank, fuck him, right? People, the point of a student loan is to finance an education, not to create wage-slaves or have we forgotten that part? But I guess that ship has sailed if random internet people are for the interests of predatory financial institutions. Such a shame..
- sdhgaiojfsa 8y agoI don't think you can classify anyone making 200k+ as a "slave" of any kind.
- decebalus1 8y ago> Wage slavery is a term used to draw an analogy between slavery and wage labor by focusing on similarities between owning and renting a person. It is usually used to refer to a situation where a person's livelihood depends on wages or a salary, especially when the dependence is total and immediate.[1][2] Does it mention anything about a limit or a salary or something? If you make 200k+ a year, sole provider for a family, pay a mortgage in a high COL, depend on your job for your healthcare and you're left with little to no disposable income, what does that make you relative to your job?
- sdhgaiojfsa 8y agoThe problem with all of this is that you have a ton of disposable income when you make this much money and live in Utah, even with student loans this large. Unless you are a dummy with money. C.f. the dude's enormous, expensive house, which, yes, is optional.
- Athlete45 8y agoI don't care how much he makes. I care about how extravagantly he lives. Check out his lifestyle instagram: https://www.instagram.com/hukesnow/?hl=en https://www.instagram.com/hukesnow/?hl=en Or better yet, check out a blow by blow of what he does on a weekly basis - http://www.pictame.com/user/hukesnow/358561263/1408325250713726831_358561263 http://www.pictame.com/user/hukesnow/358561263/1408325250713... It ain't working to pay off his loans. In fact it looks like he and his friends and family are on a permanent vacation. Guess what? I make good bank. I sure as shit don't live like this B/C it's effing expensive. I don't even have kids or debt. I know it's a foreign concept here in the US - but it's called living within or even beneath your means - particularly if you have any debt. I agree totally with you that student loans should finance an education and I too am against predatory financial institutions. What I'm disgusted by is people whining about the huge (supposedly educational) debt that they refuse to pay down while galavanting all over the world. Ease up on the multitude of pricey hobbies (and fine - call yourself a professional with sponsors - but if you are a million in debt - what you have is an expensive HOBBY), work some extra hours at your practice, and stop neglecting your wife and kids. In other words, be a man and start working on your debt.
- cahomeown456 8y agoWhere did the money go? To the academic establishment (USC in this case): tenured professors, deans/administrators, etc. Where did the money come from? The US taxpayer. The whole rotten system is a thinly-veiled massive government subsidy to the higher education industry. In addition there's a weird incentive structure for students where you either minimize loans to a reasonable amount (increasingly difficult), or you go all-in and borrow such an extraordinary amount that is impossible to pay off in any reasonable time. Then in 20 years, it's all "forgiven" and the US government covers the balance. There is no way for this to be sustainable in the long term.
- verylongaccount 8y agoI don't think that Mike Meru has anything to complain about. Professional schools have been this way for a long time --- you borrow a lot of money to go and then make a good salary which let's you pay it back. It looks to me like it worked out for him. There are prople who borrow money to attend a program on the basis of misleading information from the school. But it doesn't look like that happened here. That he lets his debt balloon instead of paying it down with his $225K/year salary is on him. It seems like he's betting on some loan forgiveness program coming along to bail him out. Meanwhile, he lives in a $1,000,000 house and drives a Mercedes.
- hellogoodbyeeee 8y agoI'm a little confused about what his average interest rate is, but if you assume .0725 (or .11) then the following math holds: if he had choosen a ten year repayment plan after he graduated then his payment would have been $7k/month or $85k/year (under 11%: $8.3k/m $99k/yr). $85k/year is roughly $120k in gross pay. What do you think his starting salary was as a dentist? I bet at least $120k and probably closer to $150k or more. That means that if his wife had a job paying roughly $50k, then they could have afforded a frugal, but comfortable lifestyle for the ten years to pay back the loans then gone nuts. (Under the 11%: his gross pay would have been $140k which would have hurt a bit). I'm not sure if I'm being clear here, but my point is if he made $150k and his wife made $50k, then their household income would be $200k. Subtract out the $120k gross pay equivalent of his loans and you have a household income of $80k. There are lots of families in Salt Lake City that survive on half that much. But the guy got a $390/month loan for a Benz while in school... That's nuts. I suspect the big mistake the guy made, and I may be wrong here, was becoming an orthodontist. It sounds like becoming an orthodontist added 50% more to his debt but I doubt it increased his salary 50% over being a dentist.
- Athlete45 8y agoSo I love numbers as much as the next person and look forward to reviewing all of these responses in detail - particularly as they pertain to interest rates, inflation and so on. HOWEVER, has ANYONE looked at this guy's instagram and Facebook accounts? It's ez to find him under his full name. After perusing these accounts in which he surfs, skis, snowboards, hikes and climbs ALL OVER THE WORLD - I ALSO came across this gem of a bio for him as listed in Dental Economics: Principles of Practice Management: "Mike is also a recognizable face outside of dentistry in that he is a sponsored big mountain snowboarder (splitboarder) that travels the world climbing mountains while documenting his travels. During the past two seasons, he pioneered and summited multiple first descents in remote ranges in the US. When he’s not serving SPEA, practicing Orthodontics, or Splitboarding, he spends time with his wife Melissa and two Daughters, Elle and Emme." For added fun, check out his insta: https://www.instagram.com/hukesnow/?hl=en https://www.instagram.com/hukesnow/?hl=en So. . . without going into ANY calculations - lifestyle is INSANE. No frugality in this household. No wonder his wife tries not to think about things. Perhaps, and this is a bold idea, he consider lowering his lifestyle a bit. As an athlete myself, these hobbies ARE EXPENSIVE!!!!! SHAMEFUL!
- t0mbstone 8y agoThe guy is making $225K a year, but only paying $18,000 a year towards his debt, leaving him over $200K (before tax). Sounds like he's making out like a bandit.
- temp20160423 8y agoI wonder at which point he gave up on paying back the loan. I think they were reasonably frugal for the first four years (the $400/mo MB being an exception). It seems like when they started the orthodontics school they considered entering this, and definitely by the time they bought the house, they had no intention of repaying the student loans.
- ebmd 8y agoHE WON A 6 MILLION DOLLAR LOTTERY. 10K+ loan payment lowered to 1.6K a month. So the government pays him 8K+ TAX FREE MONTHLY ANNUITY SUBSIDY FOR THE NEXT 25 YEARS. I'm too upset to do the exact math but 6M is a ball park once you figure in the payments and taxes he is not paying on this government subsidy.
- ebmd 8y agoHE WON A 6 MILLION DOLLAR LOTTERY. 10K+ loan payment lowered to 1.6K a month. So the government pays him 8K+ TAX FREE MONTHLY ANNUITY SUBSIDY FOR THE NEXT 25 YEARS. I'm too upset to do the exact math but 6M is a ball park once you figure in the payments and taxes he is not paying on this government subsidy.
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- bankruptcyone 8y agoGlad that student loans are NOT dischargeable via bankruptcy. Why wouldn’t this guy tighten his belt and put every penny towards the loans until fully paid off? Don’t understand why his is paying less than the accruing interest.
- trayce 8y agoI dont think he is whining about repaying the loan nor is he being financially stupid. Rather he is gaming a system created by our society choices. He is in a government repaent program where our society has said people should only be expected to pay 10% of their discrtionary income towards loans and for a fixed amount of time, 25yrs in this case. So while a financially responsible decision would be to be frugal and repay the loan, our society through our government have decided he only needs to pay 1600/mo for 25 yrs with a salary of 225k or 13k/mo after taxes. The article states he would pay 1.6 million over the 25yrs but my calculations show 19k per year and a total 480k after 25yrs assuming his income is stable. So why would he pay anymore than required, on his current government sponsored plan he doesnt even have to pay back the principle on his loan.
- belizeme 8y agoI personally know him and his wife. There is a lot of important information left out in this wsj article. I met this dude while at USC grad school. That used Mercedes they were driving was really a 1-2 year old certified car. They just could not drive a corolla or anything else. While in dental school, his wife, Mrs Melissa Meru, starts working at USC which offers a generous perk of halfing your family members tuition for 4 semesters. Think about it, he was paying half of what everyone else paid for semesters and to add insult to injury, she pretty much quits once the 4 semesters of tuition benefit run out. The guy is real snake too: while in school, he was part of the ethics committee and class president, but behind that tall handsome person was a competitive shit talker and rule bender. Mind you, also, in the mid to late 2000s, most USC classmates of him were rooming in apartments that cost only 800-900 total. 1500 rents you a nice 1br in Santa Monica, Brentwood or Beverly Hills so you can imagine where they were living at that rent price (and those cities are far from where usc is). The article fails to mention how this family consistently took vacations to Central America during their school years, the well dressed and brand name clothes they sported, the free parking they received at usc just for being Mormons, the cheating that was prevalent in the Mormon community in obtaining and passing tests around within the Mormon community. Yea, some real upstanding guy chairing an ethics committee. Oh, did I forget the fact that these Mormons purposely had families while in grad school because they had all learned to apply for welfare? So, on one hand, they’re claiming how Hispanics and African Americans are having kids and using the government to not work, but they are doing the same thing. We just didn’t realize it until word got out in the second year of our graduate program. Mr Meru did go to residency in orthodontics to chase the good financial work life balance but here’s what the article fails to mention. Fresh out of school, the family buys a Mercedes G wagon (yes, the insanely dumb looking 100k + gas guzzling boxy Mercedes SUV’s that even used cost a horrendous arm and a leg. They then purchase a completely decked out, custom ordered Mercedes minivan/utility car for their family adventures and trips. Mind you, all of these purchases are used as a tax ride-off because the article fails to mention Mr. Meru did have the ability to pay back his loans but chose to start a sunglasses company called Ltd optics and every life expense was used as a tax ride off. You should look at the Instagram and Facebook posts of the wife, Melissa Meru, and Dr Mike Meru himself: chaulkfull of vacations, great clothes, iPhone watches, custom designed Home furnishings/art and the list goes on... in one photo, Mrs. Meru posts an image of her and her two daughters wearing brand new Jordan’s. That’s at least $700 purchase. They regularly travel out of the country, every week Mr. Meru flies to aspen, Canada, Colorado or treks to different parts of Utah. Now, you might think how does he have time? Answer: the guy refuses to work full time. Most orthodontists that graduate work 6 days a week for 6-7 years but this guy works 3-4 days a week because those weekly snowboarding trips or monthly Malibu surfing excursions with the entire family can’t be done on 2 day weekends or heck 3 days even. All the while they are taking these vacations, they turn around and expense the entire thing because they advertise their cheasy sunglasses or stupid snow glasses. Just think, flight for four people to Aspen, all the snow gear for the family of four that runs into the thousands, hotel expenses, food, dining, kids entertainment and etc. costing into the thousands each weekend and then all they do is tag the hashtag ltdoptics to ride off the entire weekend as a tax expense. Oh, and a used Tesla model X (the one his wife drives) costs still a cool $90k and requires an additional in house charging dock investment. Many have pointed out that Dr mike Meru is an entitled brat and if you know him, under the nice guy persona he uses to befriend and climb ranks is a real elitist. Btw, his entire goal with his sunglasses company was to build it up, mass market it and then sell it off to some sucker like Oakley did. The guy has the money to pay it. He just doesn’t want to. Oh, and word is, after pampering DrMeru at usc, the USC faculty and dean are super upset with the way article has portrayed the school. Dr Meru’s usc tuition was never that high during his school years and many of his classmates are well on their way to a responsible, comfortable life. He’s just looking for a freebie.