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$1 Million in Student Loans. Holy Smokes!

Mai72

Mai72

Lifer
https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975

He went to dental school which explains his debt. But still. A whopping millions dollars that will probably never be paid back in his life time. What struck me was that he bought a house, and currently drives a used Tesla. He also drove a used Mercedes Benz. Used cars, but luxury cars and expensive to fix. Trips to Havana as well. I know that he;s on IBR, but shouldn't he be focused on paying off the debt first? Is he abusing the system? I had read an article that grads with high paying jobs and extremely high loan debt were abusing IBR.

I watch Dave Ramsey and he's about eliminating everything until the loan is paid in full. No trips, no luxury cars, nothing but paying off the loan. Seems like Mr. Meru wants the lavish lifestyle that normally comes with being a dentist or doctor, but without the upfront sacrifice. Just my opinion. Maybe I'm wrong.
 
Mai72 said:
https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975
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I watch Dave Ramsey and he's about eliminating everything until the loan is paid in full. No trips, no luxury cars, nothing but paying off the loan. Seems like Mr. Meru wants the lavish lifestyle that normally comes with being a dentist or doctor, but without the upfront sacrifice. Just my opinion. Maybe I'm wrong.
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If he dies at 45 he would do nothing but school and work under Dave Ramsey's plan.
 
And people saying they cannot afford 100% of their first child ask for a child deduction on their federal taxes. And then they have a second, third, and so forth while continuing to claim they can't afford the first one. Its all about abusing the system, not using it.
 
Depends. I
Ns1 said:
If he dies at 45 he would do nothing but school and work under Dave Ramsey's plan.
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Yeah... Dave's plan is for people who have spun out of control. It's a good blanket strategy, but this guy would just be slaving away for decades.

I've got $11k in student loans that I could just pay cash for right now..... but I'd rather leave my money in investments and pay 4.5%.

It may be the right or wrong move, but it fits well into my risk management plan.
 
I think that he has planned it out so that he won't have to pay it all back by the time he is eligible for forgiveness. Call it abuse or gaming the system or whatever but I can't say that I blame him. Assuming that is the case, why wouldn't he live in luxury in the meantime?
 
I am suspicious that he planned all this up front, and I'm generally not keen on my medical care provider being somebody who's more interested in money than medical care. (Not that they should work for free, but... priorities.)

That said, if you're on income based repayment, then you pay what they want based on the income, and the rest of your money is yours. I don't have an ethical problem with that. The rules are the rules and the banks wrote the rules. They're never going to get that money and they deserve to get screwed.

If I were king of the universe, I'd give him the option to "return" his DDS for a full refund. Reset button; no medical license, no debt. If he doesn't want to do that, then he has to start making full payments on a 30 year repayment plan. Same as a mortgage. (About $5k/mo.)
 
My wife and I currently have around 650k in combined student loan debt at this moment. We are paying our minimum IBR payment until we qualify for PSLF in another few years. This is the way we planned it from the start (including planning prior to taking on all the debt). I've done the math many times, we will both be repaying our entire principals with some interest, but we will be forgiven (tax free) hundreds of thousands of dollars. Provided the system doesn't implode completely.

We are using the system as intended. I don't know why that would be considered "gaming it." Every system is perfectly designed to get the results it gets.. Amirite?
 
TheVrolok said:
My wife and I currently have around 650k in combined student loan debt at this moment. We are paying our minimum IBR payment until we qualify for PSLF in another few years. This is the way we planned it from the start (including planning prior to taking on all the debt). I've done the math many times, we will both be repaying our entire principals with some interest, but we will be forgiven (tax free) hundreds of thousands of dollars. Provided the system doesn't implode completely.

We are using the system as intended. I don't know why that would be considered "gaming it." Every system is perfectly designed to get the results it gets.. Amirite?
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Seems fine to me man. All said and done I'll end up with a bachelor's and two masters degrees on various governmental dimes, paying a few thousand out of pocket. If I wasn't an idiot it would have been even cheaper. Maximize every government program.

What line of work are you guys in where you racked that up though?
 
TallBill said:
Seems fine to me man. All said and done I'll end up with a bachelor's and two masters degrees on various governmental dimes, paying a few thousand out of pocket. If I wasn't an idiot it would have been even cheaper. Maximize every government program.

What line of work are you guys in where you racked that up though?
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We're both physicians. I couldn't agree with you more.

Student loan debt is insane. However, when you have a system of essentially 0 risk (due to government backing and the taxpayers picking up the tab for defaulted students) and private lenders (now this has changed, but it was so back when I borrowed) there is nothing to stop schools from continuing to raise tuition (no one gets denied a loan) and lenders from charging what I would consider predatory rates (the bulk of mine are at 7.125%, because even if I default, Joe Taxpayer is on the hook for the rest). No one should be surprised at the results of this system.

That said, I have certainly made fairly significant life decisions based on these programs (where to live, where to work, when to have children (not yet, and I won't be able to have the number I once wish I could have), my specialty, etc.).

That said, do I think this is sustainable? Nope.
 
TheVrolok said:
My wife and I currently have around 650k in combined student loan debt at this moment. We are paying our minimum IBR payment until we qualify for PSLF in another few years. This is the way we planned it from the start (including planning prior to taking on all the debt). I've done the math many times, we will both be repaying our entire principals with some interest, but we will be forgiven (tax free) hundreds of thousands of dollars. Provided the system doesn't implode completely.

We are using the system as intended. I don't know why that would be considered "gaming it." Every system is perfectly designed to get the results it gets.. Amirite?
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I don't have a problem with it. They're getting their money back. They simply didn't make as much as they thought they would; just like everyone else the last bunch of years. Banks aren't any more special than you or me...
 
That's insane. He may as well just declare bankruptcy and live like crap for 7 years (or whatever the time period is) until it's off his record. There's no way that's getting paid in his life time unless he wins the lotto. Dentists do make a lot of money, but not THAT much.

I guess I got lucky, I graduated with a profit. I would work the summers between college years and it would pay tuition and then have enough left over for toys. I used to build a new computer almost every year with that money.
 
Red Squirrel said:
That's insane. He may as well just declare bankruptcy and live like crap for 7 years (or whatever the time period is) until it's off his record. There's no way that's getting paid in his life time unless he wins the lotto. Dentists do make a lot of money, but not THAT much.

I guess I got lucky, I graduated with a profit. I would work the summers between college years and it would pay tuition and then have enough left over for toys. I used to build a new computer almost every year with that money.
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I didn't read the article (as it was asking me to get a subscription to the WSJ) but unless something has changed, you can't BK student loans. It's one of the reasons student debt is out of control.
 
Skel said:
I didn't read the article (as it was asking me to get a subscription to the WSJ) but unless something has changed, you can't BK student loans. It's one of the reasons student debt is out of control.
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Students are the reason student loans have gotten out of control.
 
Meanwhile I just paid off my house and currently have zero debt. Try asking me later if I really give a crap about someone else's problems.
 
Red Squirrel said:
That's insane. He may as well just declare bankruptcy and live like crap for 7 years (or whatever the time period is) until it's off his record. There's no way that's getting paid in his life time unless he wins the lotto. Dentists do make a lot of money, but not THAT much.

I guess I got lucky, I graduated with a profit. I would work the summers between college years and it would pay tuition and then have enough left over for toys. I used to build a new computer almost every year with that money.
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Student loan debt is one of the VERY few types of debt that is not dischargeable in bankruptcy. Ironically it is also one of the only debts that I know of that a minor can enter in to alone.
 
The $1million is the travesty here, not how the Dude is dealing with it. When being saddled with this level of debt a person would be a fool not to game the system to have forgiven.
 
The only current way forward for anyone who wants to be a doc/dentist is to be from another country where you got your education then move here, or already be rich.
 
I bought my first stereo and a nice bike with money from my freshmen loans and grants.

My niece recently graduated from dental school. I have no idea what her student loan debt is, or if she even has any. My sister and her husband work their tails off and have done so for 25+ years to give their kids very good educations and set them up in life. And they wouldn't have it any other way.
 
HeXen said:
Meanwhile I just paid off my house and currently have zero debt. Try asking me later if I really give a crap about someone else's problems.
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If enough people do it they'll make it your problem.

sandorski said:
The $1million is the travesty here, not how the Dude is dealing with it. When being saddled with this level of debt a person would be a fool not to game the system to have forgiven.
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In part it is related to the Dude. He chose a more expensive than average school, no longer wanted to live with his parents to save money while going to school, decided to have a kid while still in school, moved to an even more expensive apartment, and bought a Benz with a $400/month payment while in school. I whole heartedly agree that high tuition is a huge problem but this may not be the best poster child given the personal contributions to the loan issue.
 
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