Celebrating 10 years! 2007-2017

The Guy Who Owes $1 Million In Student Loans

WSJ (paywall): https://www.wsj.com/articles/mike-m eru-ha passportfan305/25/18
There was a time when I thought about doing random grad degr mattbaileylawdotcom05/27/18
Here he is. http://www.americanforkmoderndentis try.com/me taxman12805/25/18
High income at 225,000 means the tax bomb is nothing. This i um1l05/25/18
On the amount forgiven after twenty five years what portion taxman12805/25/18
But only to the extent you’re solvent. jorgedeclaro05/25/18
I wonder why this little tidbit is always forgotten? There w whipster05/26/18
Exactly. esquirewalletsmatter05/26/18
I think they'll abolish the tax bomb completely. There is n david6198305/26/18
The thing about so-called "residencies" in orthodontics, not wolfman05/25/18
The comments from the boomers are hilarious. While I'm all david6198305/25/18
A Hero of Our Time zuma05/26/18
I've got about 350k and growing daily. By the time forgivene shikes05/26/18
I believe around 2032. david6198305/26/18
#feels. Same boat. I have around 315k (originally like 250k lolwutjobs05/26/18
Half a million between my wife and I. Will be 1 million by t shikes05/26/18
For those worried about the tax bomb, the IRS can pursue you caj11105/27/18
Not hard to do that at all at the school (USC Ostrow) that h onehell06/12/18
I can't wait till the WSJ does their first story on a neuros tsmonk05/27/18
The WSJ is gearing up to be the right’s mouthpiece when st um1l05/27/18
"insane interest rates" --- yes, you are right, the interest lionelhutz06/12/18
Keep in mind that most people don't go to grad school and if onehell06/13/18
This is no way the economy will survive without withering am heythere05/27/18
Do you have to apply for forgiveness? If so, just keep payi soupcansham06/14/18
That is one of the most interesting questions. My understand thirdtierlaw06/14/18

passportfan3 (May 25, 2018 - 6:28 pm)

WSJ (paywall):

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


MarketWatch synopsis (with charts):

https://www.marketwatch.com/story/he-ran-up-a-million-dollars-in-student-loan-debt-en-route-to-becoming-an-orthodontist-2018-05-25


YCombinator: https://news.ycombinator.com/item?id=17154799

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mattbaileylawdotcom (May 27, 2018 - 7:28 am)

There was a time when I thought about doing random grad degrees until retirement. I even figured out the small amount of part time work I would need to get social security.

Then I met my future wife and that plan went out the window. 20k tax free works great for the single college life, not so much with a wife and kids.

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taxman128 (May 25, 2018 - 7:01 pm)

Here he is.

http://www.americanforkmoderndentistry.com/meet-our-team/team-member.michael-meru-staff-id-19973.html

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um1l (May 25, 2018 - 7:11 pm)

High income at 225,000 means the tax bomb is nothing. This is really in a whole separate category from people making 35,000 with no raises.

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taxman128 (May 25, 2018 - 8:22 pm)

On the amount forgiven after twenty five years what portion of the amount forgiven is income?

The principal

All of the interest

Just the interest on which the taxpayer received a tax benefit

Tax Benefit Rule. A rule that provides that the amount of an expense recovered must be included in income in the year of the recovery to the extent the original expense resulted in a tax benefit. The most common example is a state income tax refund of tax deducted in the prior year.

https://www.cpajournal.com/2017/10/13/unlocking-benefits-tax-benefit-rule/

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jorgedeclaro (May 25, 2018 - 11:56 pm)

But only to the extent you’re solvent.

Reply Like (0)
whipster (May 26, 2018 - 8:43 am)

I wonder why this little tidbit is always forgotten? There will be no tax bomb unless you are solvent, which means you have more assets than debt.

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esquirewalletsmatter (May 26, 2018 - 2:33 pm)

Exactly.

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david61983 (May 26, 2018 - 3:30 pm)

I think they'll abolish the tax bomb completely. There is none for PSLF already.

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wolfman (May 25, 2018 - 7:32 pm)

The thing about so-called "residencies" in orthodontics, not only do they not pay you, unlike a medical residency or even a hospital dentistry one (some of those pay a little, some pay OK), I'm pretty sure you literally pay THEM to work there, it's crazy.

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david61983 (May 25, 2018 - 7:49 pm)

The comments from the boomers are hilarious. While I'm all for personal responsibility and this guy deserves a lot of blame it was the boomers that created the system that allows students to borrow whatever they want and schools to charge whatever they want. They also won't admit that tuition is like 4-5x higher today than it was when they were in school and that's adjusted for inflation.

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zuma (May 26, 2018 - 1:08 am)

A Hero of Our Time

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shikes (May 26, 2018 - 8:41 am)

I've got about 350k and growing daily. By the time forgiveness rolls around, I'm going to be on the same train as this guy.

What year is the first round of the 25 year IBR forgiveness taking place? I wanna calendar to see how they will deal with the tax bomb as I'm not going to be there for quite some time.

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david61983 (May 26, 2018 - 2:31 pm)

I believe around 2032.

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lolwutjobs (May 26, 2018 - 5:51 pm)

#feels. Same boat. I have around 315k (originally like 250k but my payments weren't even covering all the interest)

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shikes (May 26, 2018 - 6:39 pm)

Half a million between my wife and I. Will be 1 million by the time forgiveness rolls around. Monopoly money. No worries at all. If tax bomb doesn't get eliminated they re legitimately going to ask me to pay 300k in taxes on the forgiveness approximately 20 years from now I probably just move abroad.

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caj111 (May 27, 2018 - 12:42 am)

For those worried about the tax bomb, the IRS can pursue you for another ten years, then the statute of limitations kicks in and you are no longer obligated to pay the tax. So, after another ten years of just paying what you can like you did with your student loans, you'll be free as a bird.

Also, how the *hell* do you run up $1 million in debt going to dental school? Did the guy borrow for all his living expenses on top of tuition, and choose to live large?

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onehell (Jun 12, 2018 - 1:27 pm)

Not hard to do that at all at the school (USC Ostrow) that he attended. 130k per year for four years to the DDS = 520k

https://dentistry.usc.edu/programs/dds/cost-of-attendance/

Now add 3 years at 100k+ each for the ortho program

https://dentistry.usc.edu/programs/certificate/orthodontics/

So now we're over 800k in debt before we even count one dime of interest, which has now been accruing and compounding at like 7% for the last 7 years. Even if you have no undergrad debt (as he did) it's very easy to get to 1m.

To the extent you can fault him for anything, I guess it would be his decision to get his ortho certification through more schooling rather than doing a residency that might have paid a stipend. He probably should've either done a residency or just practiced general dentistry without specialization, as that would've roughly halved his debt.

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tsmonk (May 27, 2018 - 9:12 am)

I can't wait till the WSJ does their first story on a neurosurgeon who makes $500,000 getting all of their loans forgiven tax free after 10 years. They know exactly what they are doing putting out articles like this.

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um1l (May 27, 2018 - 10:31 am)

The WSJ is gearing up to be the right’s mouthpiece when student loans are bailed out or at least greatly curtailed. The balance is only so high due to these insane interest rates. I doubt the tax bomb exists in 2032, should be gone or at least something much smaller like only on original principal.

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lionelhutz (Jun 12, 2018 - 1:35 pm)

"insane interest rates" --- yes, you are right, the interest rates are insane. Insanely low for the risk of the loan. The real non-payment and default rate on federal student loans is something like 20%. An interest rate that covered the real risk of the loans would probably be around 25-30%.

remember a lender has to cover the cost of money and the default rate with the interest rate. the Fed gov is vastly underpricing the loans.

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onehell (Jun 13, 2018 - 7:40 pm)

Keep in mind that most people don't go to grad school and if you don't go beyond UG you can't borrow beyond the Stafford limit which is like 30k. At that level even a starbucks barrista can pay you back (likely without IBR) and if they don't, well there's no SOL and you can garnish wages and intercept tax refunds without a court order. So you'll squeeze it out of 'em eventually. It's really just a small percentage of outliers who will definitely never pay the loan back and the losses from them are offset by the rest.

Stafford loans are probably right-priced or (at least with respect to unsubsidized Stafford) even overpriced. GradPLUS is what's out of control.

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heythere (May 27, 2018 - 3:16 pm)

This is no way the economy will survive without withering amounts of inflation. We tried zero interest rates and all we got is financial gimmicks and craploads of sharing economy IPOs when we should have had machine tools and investments (and breakthrough results) in computers, drones, pharma tech, nano tech. Something/s is/are preventing the people who would devise tangible products from actually designing and making them. Might as well try inflation.

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soupcansham (Jun 14, 2018 - 6:47 pm)

Do you have to apply for forgiveness? If so, just keep paying the IBR amount and never ask for the write-off.

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thirdtierlaw (Jun 14, 2018 - 7:58 pm)

That is one of the most interesting questions. My understanding is that federal loans are forgiven upon death. So I'd have no moral hangups just having an IBR payment of zero while I'm retired.

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