- Posted by admin
- On June 12, 2018
DRAPER, Utah—Mike Meru, a 37-year-old orthodontist, made a big investment in his education. As of Thursday, he owed $1,060,945.42 in student loans.
Mr. Meru pays only $1,589.97 a month—not enough to cover the interest, so his debt from seven years at the University of Southern California grows by $130 a day. In two decades, his loan balance will be $2 million.
He and his wife, Melissa, have become numb to the burden, focused instead on raising their two daughters. “If you thought about it every single day,” Mrs. Meru said, “you’d have a mental breakdown.”
Due to escalating tuition and easy credit, the U.S. has 101 people who owe at least $1 million in federal student loans, according to the Education Department. Five years ago, 14 people owed that much.
More could join that group. While the typical student borrower owes $17,000, the number of those who owe at least $100,000 has risen to around 2.5 million, nearly 6% of the borrowing pool, Education Department data show.
More than a third of borrowers from one of the government’s main graduate school lending programs have enrolled in some form of federal loan-forgiveness plan.
“These are choices. We’re not coercing,” said Avishai Sadan, dean of USC’s Herman Ostrow School of Dentistry, where Mr. Meru went to school and one of the most expensive in the U.S. “You know exactly what you’re getting into.”
Even the best planners might not have anticipated the sharp increases in tuition and student-loan interest rates from 2005 to 2012, Mr. Meru’s tenure as a student. While the Federal Reserve was reducing interest rates to near zero to combat the recession, rates for grad students were as high as 8.5%.
Dental school is the costliest higher-education program in the U.S. Private nonprofit schools during the 2015-2016 school year charged an average of $71,820 a year, the Urban Institute found. The USC program now costs $91,000 a year, and $137,000 when living expenses are included.
For Mr. Meru, tuition at USC first went up during his second year. Interest rates followed. Halfway through dental school, he said, he started to worry about the soaring cost of his education.
“I’m sitting here saying, ‘Holy crap! Should I really be doing this?’ ” Mr. Meru recalled. “ ‘Should I drop out?’ ”
Mrs. Meru, 35, said she and her husband decided it was too late to turn back. If he quit or transferred to a cheaper school, he still owed for the loans he had already taken.
Mr. Meru’s financial records—provided to The Wall Street Journal—show he borrowed $601,506, a debt that swelled to more than $1 million by fees and interest.
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. That compares with a $158,000 median income for dentists, according to the Labor Department.
Mr. Meru became so frustrated with the high interest rates that he helped start a national dental-student movement to lobby Congress to lower rates on grad students. The effort went nowhere.
Some dental school educators fear that the eye-popping costs to enter the profession could dissuade good prospects from even trying.
“I don’t think you’ll find any dental school dean in the country who will not tell you they’re concerned about the cost,” said Dr. Sadan, of USC. “But what’s the action?”
Mr. Meru, a lean 6-foot-7, was the eldest of three boys raised in Newbury Park, Calif., an affluent suburb west of Los Angeles. His father, who didn’t finish college, owns a small construction business. His mother, a college graduate, worked mostly as a secretary.
Mr. Meru found his calling while still a teenager. He was insecure over his crooked teeth and an irregular jaw line, he said: “I was embarrassed to talk to girls. Orthodontics changed my life.”
After high school, Mr. Meru, who is Mormon, spent two years on a mission in Brazil, then returned to the U.S. to complete his undergraduate degree at Brigham Young University in Utah. He paid his college tuition with money from his parents and by waiting tables at the Old Spaghetti Factory near the school’s Provo campus.
Helping pay for college was “the agreement we made all our boys,” his mother, Karen Meru, said. Graduate school wasn’t part of the deal. “We couldn’t afford it,” she said. “We’re middle class.”
Mr. Meru met and married his wife while at Brigham Young, and he graduated debt-free in 2005. He picked the USC dental school for its prestige and because he wanted to live closer to his parents.
Mr. Meru said the dental school’s financial-aid director, Sergio Estavillo, estimated that the basic four-year program would require $400,000 to $450,000 in student debt, including interest. Mr. Estavillo said he didn’t recall the conversation but had no reason to doubt its accuracy.
Mr. Meru and his wife concluded dental school was a good investment, given the salary he expected to earn.
“We’re like, ‘Well, we can make this work,’” Mrs. Meru said. “There are certain things that are OK to go into debt for: a house, an education, a car.”…..