Meet Dr Mike Meru, he is a fully qualified orthodontist, but that’s not what makes him special- he is the doctor with $1 million worth of student debt. He is certainly paying too much for his student debt, and the sad thing- he’ll likely never break free.
As of May 2019, he owes $1,060,945.42 in student loans, paying a mere $1589.97, which isn’t even enough to cover the interest payments. The WSJ reports that his debt is growing by $130 per day and in 20 years, his debt will be more than $2 million.
Who is Dr Mike Meru?
Before we delve in his $1 million mountain of debt, we need to establish some facts. Dr Mike Meru is a 38-year old, mild mannered Orthodontist practicing in the State of Utah.
He graduated from the University of Southern California as a dental school graduate. Once he had graduated, he found out he was to pay $1 million in student debt, and he will be doing this for at least the next 25 years.
Dr Mike Meru made headlines in late 2018 when the Wall Street Journal reported about his rare financial situation. Since the WSJ article, Dr Mike Meru has become somewhat of a legend- with people from Dave Ramsey to Jaspreet Singh to The Student Loan Planner talking about him.Will Dr. Meru really have to pay back between $1 million and $2 million?
The answer is almost certainly no. Due to US federal law, Dr Meru will only have to pay down on his debt until it is over 25 years old. Once it is older than 25 years, it will be wiped from his record, and he’ll never have to pay it back.
But even if he is forced to pay the whole balance back, he will be unlikely to do so. Not only will Dr Meru’s debt continue to accumulate interest, it probably wouldn’t come anywhere close to the $1-$2 million. Dr Meru will likely only pay back $414,900 in present value before his debt is discharged.
Even if Dr Meru is forced to pay the rest, which is highly unlikely anyway, he will probably only get to paying another $100,000 before he retires.
Is this a growing trend?
Whilst Dr Meru’s case may be unfortunate, and extremely expensive, he is not the only one in this kind of situation. There are roughly 101 people in the same sort of situation as Dr Mike Meru.
According to statistics by StudentAid, one third of all student loan debt is held by only 5.5% of borrowers.
Whilst Dr Meru may be an exception to the growing rule- the average student loan debt is $50,000. But I don’t think this will be the last instance of a respectable person being forced to pay “an arm and a leg” as my mother would’ve put it.
If Dr Meru isn’t paying his debt off in full, who is?
You may have noticed one glaring detail- he will never pay off his debt in full. This obviously raises the question as to who will foot the bill?
The answer is quite clear, it will not be Dr Mike Meru or the University of Southern California, but the American taxpayer who foots the bill.
This likely infuriates most of you- neither USC, nor Dr Meru will ever fully see the impact of their actions.
$200k won’t much difference in the long term- especially as Dr Meru is a 6 figure salary earner, and so will more than pay this back in the form of taxes.
The Department of Education has seen cases like Dr Mike Meru’s before- they know that situations like his aren’t good for them. They assume that for every student like Dr Meru, they will lose $28.70 on each $100 in debt enrolled in income-driven repayment plans.
This is obviously a flawed system- we can see it, and so can the Department of Education.
What will the DOE do about this?
Whilst for Mike Meru, it may be too late, for others, it is not.
Ideally, we’d scrap the student loan system, and come up with a far superior system. But for now, Congress will have to act in ways that benefit the people.
For now, high interest, high amount loans such as Dr Mike Meru’s are keeping the low interest, low amount loans from defaulting.
How can I spare myself the pain Dr Mike Meru is in?
Dr Meru is likely in a lot of pain right now over his personal finances. The Orthodontist may be earning $200k per year, live in a $400k house and drive a brand new Tesla, but he’s not financially free.
As I have stated on this site before, I have never been to college or University, yet I am considerably well-off.
I see this so often- the brightest minds of our generations are not sat changing the world. They are contempt with drowning in debt until they die.
I talk a lot about mindset, because that is what makes or breaks you, in terms of financial freedom or not. I am not here to tell you that college/university isn’t for you- that’s not my decision to make- it’s yours.
Do you think there are others like Mike Meru? Do you know of anyone in particular? Tell me in the comments!
