
Mike Meru Has $1M in Student Loans. How Did That Happen? - arcanus
https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975
======
sdhgaiojfsa
I 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
Agreed. 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.

------
Hasz
Guy 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-...](https://www.fullwsj.com/articles/mike-meru-has-1-million-in-student-
loans-how-did-that-happen-1527252975)

~~~
Harvey-Specter
> 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
From 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
I 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?

~~~
hellogoodbyeeee
I think the article is saying that had he received a loan at a 4% rate for 25
years he would paid the same amount toward the bill as he is currently doing
for loans at a 7.25% rate with loan forgiveness at the end. The 4% is a
hypothetical rate, not a real one. Though he did have at least one student
loan at a rate of less than 5%. Most student loans are made up of smaller
loans. For example, my wife's "student loan" is $100k, but it is made up of 8
loans of 4k to 30k with varying interest rates of 3% to 6.5%. Rates increase
every couple of years. To be clear, federal loans are fixed rate loans, but
each year you are in school, you may incur new, higher rate loans than the
year before.

------
Athlete45
So 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!

------
verylongaccount
I 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.

------
iaw
So, 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
And? He has cost of living expenses. I'm impressed he's able to pay $1600/mo.

~~~
IanCal
Is having expenses under $8400 per month particularly impressive?

------
cahomeown456
Where 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.

------
selimthegrim
My 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.

------
awat
I’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
Why 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.

------
kerng
Guy earned $225,000 last year- sounds like he is willingly not paying back.
Amazing how some people get away with that!

~~~
rokhayakebe
You 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.

------
chasing
I'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.

------
hellogoodbyeeee
I'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.

------
trayce
I 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.

------
sykh
My 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
Why did her time in residency not count toward pslf?

~~~
sykh
It 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
Unless she wasn't on an appropriate payment plan during residency, that time
still counts. I'd look into it.

~~~
sykh
She wasn't on PAYE or any of the other income based repayment plans. You have
to be on such a plan for payments to count.

~~~
riahi
The 10 year standard counts as well, if I remember correctly.

Basically only deferral or taking the extended 30 year plan don't count.

------
wtvanhest
One 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.

------
pooya13
I 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
His income is entirely relevant, because he is able to pay back the loans but
chooses not to pay them back.

------
t0mbstone
The 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
I 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.

------
bankruptcyone
Glad 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.

------
nraynaud
going 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).

------
CamelCaseName
Does anyone have a non-paywall link? Fullwsj is not working for me.

~~~
AdamM12
Google the article title.

------
belizeme
I 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.

------
jbob2000
> 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
And 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
My 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.

------
decebalus1
The 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..

~~~
Athlete45
I 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/358561263/1408325250713...](http://www.pictame.com/user/hukesnow/358561263/1408325250713726831_358561263)
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.

~~~
decebalus1
There were mentions on this thread about him being sponsored for all his trips
and equipment but whatever.

> I care about how extravagantly he lives

> It ain't working to pay off his loans

> 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.

> 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

> be a man and start working on your debt. (Oh man, this is hilarious. Is this
> what constitutes being a man these days?)

All of the above are definitely not foreign concepts in the US. It's called
self-righteousness (as I mentioned in my very popular initial post above) and
it built this country. Millions of plebs getting fucked by the corporate
machine while others hold the moral ground to 'pay your debt and be a man!'.
It's an amazingly efficient system because you have plebs self-governing by
social pressure instead of spending more money (and providing negative value
for the shareholder) on enforcement. This is why people hang themselves when
they're in debt.

I know it's an unpopular opinion but I personally root for the guy. Good for
him, he should not pay shit. If this is his way of fighting the system so be
it. It reminds of me of a plot from Weeds [1]. If I were him I would spend and
enjoy all of my hard won money (like any first world person in a civilized
country should be able to do) and shrug at the creditors.

Fuck student loans [2], fuck cash hoarding universities and last but not
least, fuck the BAPCPA.

[1][https://www.youtube.com/watch?v=_UqAo5A6-TQ](https://www.youtube.com/watch?v=_UqAo5A6-TQ)

[2][https://www.youtube.com/watch?v=PE66HEZBZYE](https://www.youtube.com/watch?v=PE66HEZBZYE)

------
Overtonwindow
This 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.

~~~
mal10c
I 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?

