Orthodontist with $1 million in student loans on front page of WSJ

[Anothercalidds]

How do we make an appointment to see u? Or ask u questions ??

This is most dentists actually. They sacrifice for years then move to a saturated area because that's where they want to live, and they're stuck looking at garbage practice listings and making 150k a year as a hustling associate with 400k in studebt debt.

They listen to the mortgage broker and buy a house 3.5 times their earnings. They buy a new car because the old one from dental school breaks down. They don't know about 401ks so they avoid them and leave their savings in the bank getting 1%.

Perhaps their spouse is equally financially illiterate, so he or she spends money like they're married to a dentist instead of a teacher or firefighter. Before you know it, they have $20,000 of credit card debt and a low five figure amount in retirement in their 40s so they can afford their astronomical mortgage in a good school district somewhere in New Jersey / NY or California.

40% of Americans have less than $400 for a cash emergency. It's no secret that most people stink at personal finance.

Also, keep in mind when you hear how much dentists are making that you're hearing from a biased sample size. No one wants to admit that they're struggling and wish they had chosen another school or area to buy a practice in. You're way more likely to hear from your orthodontist friend of the family who's easily making 500k+ when he happens to be in the top 1% of the profession.

If you want to be in that top 1%, buy a practice soon after graduating (1-3 years) in an area that needs dentists. I had a brand new grad in a town of 5000 in the Midwest produce 2 million in her first year after dental school for example. Go to an in state school and live with at least 2 roommates while you're there and drive a beater car. Get help from family or spouses too. Try to keep the debt below 300k.

an

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[Anothercalidds]

Blows my mind how many dental students may be booksmart academically but financially illiterate. I’ve got classmates paying OOS tuition who are grossly underestimating their 10/yr monthly payments

so what is the solution. if u only get into an expensive school, what do u recommend? how do we deal with this 500k debt.

 

[deleted480308]

so what is the solution. if u only get into an expensive school, what do u recommend? how do we deal with this 500k debt.

Don’t take it if you won’t be able to pay it back...

 

[redhotchiligochu]

so what is the solution. if u only get into an expensive school, what do u recommend? how do we deal with this 500k debt.

You need to have a financial plan BEFORE you even start dental school. I’m fortunate to have worked and saved/invested aggressively over the past 5-6 years, getting double-digit returns (12-38% annually) with index funds/sector ETF’s and “gambling” buying/short-selling oil ETFs. I didn’t want to share this on a public forum since personal finances are, well, personal, but I am essentially on track to have amassed a “tax-bomb” to pay off my student loans by 2030, even without additional savings on my part. Even though I do go to an “expensive” school myself. This also gives me the option to put a solid down payment for a house/practice/Porsche 911 if I choose to extend my loan payments to 15 years since I have solid cash flow and my investment returns clearly exceed the ~7% interest grad Plus loans. It also helps that I have an “excellent” credit score, which I hope to maintain through dental school.

If an applicant straight out of undergrad, have no savings, and/or are financially illiterate, he/she has no business enrolling in a $500k dental school. That’s my answer to your question and i’m sure @Big Time Hoosier and other financially literate SDN members would 100% agree with me on this. Prepare yourself financially BEFORE attending dental school, not afterwards

 

[Big Time Hoosier]

so what is the solution. if u only get into an expensive school, what do u recommend? how do we deal with this 500k debt.

HPSP. You don’t have to make the military a lifelong career. Just do your 4 years and get out. You’ll then be eligible to have the GI Bill help pay for a civilian residency, if that’s your goal. That’s a win-win.

Big Hoss

 

[NITRAS]

so what is the solution. if u only get into an expensive school, what do u recommend? how do we deal with this 500k debt.

Going $500k into debt to get a job making $150k does not help you. Medical school isn't quite as bad since most attendings can make at least $300k with most any board certification within a year or two. But realize you aren't working, not investing, and put yourself way behind.

If you can only get into professional school by incurring $500k in debt, you SHOULD NOT GO.

My opinion.

 

[peterngu]

After going through the internets and reading up on this case, I found a post that speaks volumes.

A post by Athlete45 on ycombinator com (will have to google the discussino, I can't post the link)
Talks about his Instagram account (user name hukesnow) where he's documenting his mountain-climbing and world-wide travels.

You can also find his speaker bio at principlesofpracticemgmt com, that mentions his world travels and hobbies.

Victim indeed.

 

[TeeKay310]

Can't read the article without a WSJ subscription. Could you shed some light as to why he's only paying <$1,600/month in repayment? Ostensibly working for a corporate group would not qualify him for PSLF (apologies if it gets into that beyond the 'preview' section).

It's most likely because he's under the federal PAYE or IBR plan which basically involved paying 10-15% of your income for 20-25 years depending on which one you apply/ qualify for. Then after the 20-25 years is up you are forgiven of your remaining balance which is actually considered income and so you will most likely end up needing to lump sum repay 30-40% income tax on that remaining balance when you are forgiven of your loan balance.

This is little different from the PSLF which is 10 years working in a public servant job position in a federally designated health need location while making 120 monthly payments under the IBR plan (10 years). also the loan balance forgiven is not taxed I believe but fact check me on that one cause I havent investigated the PSLF plan as much.

FYI, travis has another thread up and he's updated that people starting their studied in 2018 and onward will no longer have access to the IBR and PAYE plans because trump has replaced those with a 30 year 12% of your income plan before loan forgiveness eligibility.

 

[JohnDoeJR]

You need to have a financial plan BEFORE you even start dental school. I’m fortunate to have worked and saved/invested aggressively over the past 5-6 years, getting double-digit returns (12-38% annually) with index funds/sector ETF’s and “gambling” buying/short-selling oil ETFs. I didn’t want to share this on a public forum since personal finances are, well, personal, but I am essentially on track to have amassed a “tax-bomb” to pay off my student loans by 2030, even without additional savings on my part. Even though I do go to an “expensive” school myself. This also gives me the option to put a solid down payment for a house/practice/Porsche 911 if I choose to extend my loan payments to 15 years since I have solid cash flow and my investment returns clearly exceed the ~7% interest grad Plus loans. It also helps that I have an “excellent” credit score, which I hope to maintain through dental school.

If an applicant straight out of undergrad, have no savings, and/or are financially illiterate, he/she has no business enrolling in a $500k dental school. That’s my answer to your question and i’m sure @Big Time Hoosier and other financially literate SDN members would 100% agree with me on this. Prepare yourself financially BEFORE attending dental school, not afterwards

First, your advice for not attending a $500k dental school without a solid plan to pay for it is good. BUT, I'd be interested to see what exact funds you are investing in (or at least a rough idea) to receive up to a 38% return annually with the methods you described. Feel free to PM me, I'm interested. Because if you have been consistent over the past few years, you may want to drop out of dental school and apply for a job at Goldman Sachs. The S&P 500 has a real return of 7%, so you are significantly beating the market (maybe a little unrealistically). Not everyone has the means to save money. A good number of people have to pay their way through undergrad and what little money they could save won't put a large dent in loan if grown at a reasonable 6-8%. And even in then it may be more beneficial to not even invest the money if it means they can pay for living expenses and avoid taking out a loan.

Before accepting a position at a school, calculate the worst case scenario in terms of the amount of money you will need to pay for the next four years, consider the life you want to live (hours, expenses, vacations, kids, etc.) and then make your decision. Personally, I just want financial freedom. A decent house and time off to travel. That kind of life is more easily attainable than if I want a brand new sports car and a mansion with a pool. Unless you have your parents paying for dental school (I'm jealous), then dental school is a risk and risks should always be calculated if possible.

 

[SpartanWolverine]

First, your advice for not attending a $500k dental school without a solid plan to pay for it is good. BUT, I'd be interested to see what exact funds you are investing in (or at least a rough idea) to receive up to a 38% return annually with the methods you described. Feel free to PM me, I'm interested. Because if you have been consistent over the past few years, you may want to drop out of dental school and apply for a job at Goldman Sachs. The S&P 500 has a real return of 7%, so you are significantly beating the market (maybe a little unrealistically). Not everyone has the means to save money. A good number of people have to pay their way through undergrad and what little money they could save won't put a large dent in loan if grown at a reasonable 6-8%. And even in then it may be more beneficial to not even invest the money if it means they can pay for living expenses and avoid taking out a loan.

Before accepting a position at a school, calculate the worst case scenario in terms of the amount of money you will need to pay for the next four years, consider the life you want to live (hours, expenses, vacations, kids, etc.) and then make your decision. Personally, I just want financial freedom. A decent house and time off to travel. That kind of life is more easily attainable than if I want a brand new sports car and a mansion with a pool. Unless you have your parents paying for dental school (I'm jealous), then dental school is a risk and risks should always be calculated if possible.

Just investing in the DJIA over the last five years would have given you a return of >25% in two of those years with an average return of >14% during that five year period. 12% would have been great in 2015, though. With a little bit of lucky gambling, 12-38% seems reasonable though.

 

[2TH MVR]

Holy ****. Some of you are financial geniuses. While attending Arizona State. The only financial related decisions I made were: nickel beer night at the Devil House or 2 for 1s at Clancys.

 

[Jueves]

Just investing in the DJIA over the last five years would have given you a return of >25% in two of those years with an average return of >14% during that five year period. 12% would have been great in 2015, though. With a little bit of lucky gambling, 12-38% seems reasonable though.

To add to this, if you loaded up on Facebook’s stocks during the Zuckerberg trial, you would of had a 20% return as of now. Simply invest in some solid Tech companies while the bubble is growing and you’re practically guaranteed some good returns.

 

[SpartanWolverine]

To add to this, if you loaded up on Facebook’s stocks during the Zuckerberg trial, you would of had a 20% return as of now. Simply invest in some solid Tech companies while the bubble is growing and you’re practically guaranteed some good returns.

On the FB note... I bought in around the FB IPO @$30.00 (now $185) and was the laughing stock of my friends. I listened to them and sold, making a couple of bucks. If I had held until now it would have been a 616% return over 6 years. You win some, you lose some!

 

[redhotchiligochu]

On the FB note... I bought in around the FB IPO @$30.00 (now $185) and was the laughing stock of my friends. I listened to them and sold, making a couple of bucks. If I had held until now it would have been a 616% return over 6 years. You win some, you lose

First, your advice for not attending a $500k dental school without a solid plan to pay for it is good. BUT, I'd be interested to see what exact funds you are investing in (or at least a rough idea) to receive up to a 38% return annually with the methods you described. Feel free to PM me, I'm interested. Because if you have been consistent over the past few years, you may want to drop out of dental school and apply for a job at Goldman Sachs. The S&P 500 has a real return of 7%, so you are significantly beating the market (maybe a little unrealistically). Not everyone has the means to save money. A good number of people have to pay their way through undergrad and what little money they could save won't put a large dent in loan if grown at a reasonable 6-8%. And even in then it may be more beneficial to not even invest the money if it means they can pay for living expenses and avoid taking out a loan.

Before accepting a position at a school, calculate the worst case scenario in terms of the amount of money you will need to pay for the next four years, consider the life you want to live (hours, expenses, vacations, kids, etc.) and then make your decision. Personally, I just want financial freedom. A decent house and time off to travel. That kind of life is more easily attainable than if I want a brand new sports car and a mansion with a pool. Unless you have your parents paying for dental school (I'm jealous), then dental school is a risk and risks should always be calculated if possible.

I will likely get a lot of flak on this forum but I s

Just investing in the DJIA over the last five years would have given you a return of >25% in two of those years with an average return of >14% during that five year period. 12% would have been great in 2015, though. With a little bit of lucky gambling, 12-38% seems reasonable though.

I admittedly got lucky in 2015. My index fund ETF’s were down ~10% but I made a good amount of money shorting oil in October, when WTI crude oil cratered from $110 to 50-ish by the end of the year. Which explains my 12% net gain post-tax.

But back to OP’s point: specializing is fine, but current and matriculating dental students need to be fully aware of the financial ramifications and not pity themselves for being in a suboptimal financial position by working in saturated areas and acting self-entitled about their own spending habits.

P.S. My crystal ball says that there will be many threads on SDN predental/dental circa 2020-2022 about recent grads complaining about their student loans.

 

[dentistforthewin]

Well at least Dave Ramsey is willing to help him!! Dave Ramsey: "
TO MIKE MERU:

We will fly you and your wife to Nashville to personally meet with our financial coaches and help you get out of this mess. ALL ON OUR DIME. Seriously.

No one is without hope, and we can help you.

Email daveonair and we'll set it up.

If anyone watching this knows Mike, tell him!"

 

[deleted480308]

Well at least Dave Ramsey is willing to help him!! Dave Ramsey: "
TO MIKE MERU:

We will fly you and your wife to Nashville to personally meet with our financial coaches and help you get out of this mess. ALL ON OUR DIME. Seriously.

No one is without hope, and we can help you.

Email daveonair and we'll set it up.

If anyone watching this knows Mike, tell him!"

That guy won’t do what ramsey would propose

 

[Big Time Hoosier]

Well at least Dave Ramsey is willing to help him!! Dave Ramsey: "
TO MIKE MERU:

We will fly you and your wife to Nashville to personally meet with our financial coaches and help you get out of this mess. ALL ON OUR DIME. Seriously.

No one is without hope, and we can help you.

Email daveonair and we'll set it up.

If anyone watching this knows Mike, tell him!"

Did this offer legit happen? That would be such an awesome show!

@Student Loan Planner, do you personally know Dr. Meru? Could you make this happen?

Big Hoss

 

[Life of Pablo]

Did this offer legit happen? That would be such an awesome show!

@Student Loan Planner, do you personally know Dr. Meru? Could you make this happen?

Big Hoss

It did

 

[SpartanWolverine]

It did

lol. Well, basically a textbook copy of the article. While I have my gripes with Mr. Ramsey, he has very much the same issues with the article that I have.

1) 'An orthodontist' =/= 'a dentist' when it comes to income.

2) America is stupid as we allow ourselves to pay his education bill.

3) We give unlimited lines of credit to 18-year-old kids on our dime.

4) WTF is college [and beyond] education worth? It's really 'a bunch of stupid people in a pile'.

5) "Mike Meru's life is a disaster". So why does he live like a king with a house and car nicer than the vast majority of American citizens? I hope Dave Ramsey can talk him into getting out of the debt he owes... as opposed to burying his head in the sand for whatever period it takes to have the government "write off" the debt.

 

[SpartanWolverine]

Why the dentist with $1 million in student debt spells trouble for federal loan programs

A well-written article on Dr. Meru.

 

[distressstudent]

I don't even check SDN anymore but I saw that this piece recently hit the news in a big way.

Everyone is already labeling this guy's life as a disaster because of how much student loan he has. However, the biggest story to me imo is how damn generous the income repayment programs are, and how it basically enables school to charge outrageous amounts like this.

Mike Meru is living a comfortable life and is by no means struggling.

To quote the article that SparatanWolverine linked, "
In Dr. Meru’s case, the federal government paid USC tuition of $601,506 for his education, but he will only pay back only $414,900 in present value before his debt is discharged.[1] ...
The borrower does well, too. Despite earning $225,000 each year—and almost $5 million (again, in net present value) over the course of his loan payments—Dr. Meru will pay back only $414,900 on a $601,506 degree. Because the balance of the loan is going to be forgiven, neither he nor the school cares whether tuition is too high or whether to rack up a bit more interest delaying repayment. "

The Student Loan Planner has a NPV caculator too, and I punched in an estimate and got similar numbers as well.

I agree with 99% of what Dave Ramsey said in his video. The 1% I disagree with is how Mike Meru's life is a disaster, and there is no way in hell Ramsey conventional advice of his "snowball technique" is going to help him. At this point, Meru's most sound financial plan is to literally ignore his balance and just let IBR ride it out and prepare for the tax bomb at the 25 years mark. He would end up saving more money by ignoring his debt, rather than tackling it straight on. Unfortunately, America rewards "stupid" behavior.


To quote the WSJ article "The government repayment plan affords the Meru family a comfortable life. Their home is on a mountain with panoramic views of the snow-capped peaks surrounding Salt Lake City. They take vacations, including a recent trip to Havana. He drives a used Tesla."

If that's what a million dollar student loan gets you, then that doesn't sound bad at all. That line of thinking, however, is very dangerous.

 

[NITRAS]

Dr. Meru's life is comfortable because he is being supported by the American taxpayer. The whole student loan program is fundamentally flawed. We (as taxpayers) are not helping students. There are many, many reasons why. Dr. Meru's example, is extreme, but in the past few months I've seen dozens of people who are planning on $500k-$600k in debt. This story will repeat itself.

This is a time of political change. Things will change. I wouldn't count on forgiveness after 20-25 years. Even if Dr. Meru does stay on IBR for 25 years and get it forgiven, he seems too stupid to save up the money for the tax bill. People who don't pay $700,000 tax bills go to jail.

If Dr. Meru followed Dave Ramsey's advise (sold EVERYTHING), worked like a crazy person (doubled his income), he would have a very, very hard 5 years. But he could do it. And he would be 42 and free with a high income. . . . . I doubt it will happen.

 

[Likkriue]

I don't even check SDN anymore but I saw that this piece recently hit the news in a big way.

Everyone is already labeling this guy's life as a disaster because of how much student loan he has. However, the biggest story to me imo is how damn generous the income repayment programs are, and how it basically enables school to charge outrageous amounts like this.

Mike Meru is living a comfortable life and is by no means struggling.

To quote the article that SparatanWolverine linked, "
In Dr. Meru’s case, the federal government paid USC tuition of $601,506 for his education, but he will only pay back only $414,900 in present value before his debt is discharged.[1] ...
The borrower does well, too. Despite earning $225,000 each year—and almost $5 million (again, in net present value) over the course of his loan payments—Dr. Meru will pay back only $414,900 on a $601,506 degree. Because the balance of the loan is going to be forgiven, neither he nor the school cares whether tuition is too high or whether to rack up a bit more interest delaying repayment. "

The Student Loan Planner has a NPV caculator too, and I punched in an estimate and got similar numbers as well.

I agree with 99% of what Dave Ramsey said in his video. The 1% I disagree with is how Mike Meru's life is a disaster, and there is no way in hell Ramsey conventional advice of his "snowball technique" is going to help him. At this point, Meru's most sound financial plan is to literally ignore his balance and just let IBR ride it out and prepare for the tax bomb at the 25 years mark. He would end up saving more money by ignoring his debt, rather than tackling it straight on. Unfortunately, America rewards "stupid" behavior.


To quote the WSJ article "The government repayment plan affords the Meru family a comfortable life. Their home is on a mountain with panoramic views of the snow-capped peaks surrounding Salt Lake City. They take vacations, including a recent trip to Havana. He drives a used Tesla."

If that's what a million dollar student loan gets you, then that doesn't sound bad at all. That line of thinking, however, is very dangerous.

There is still the 700k-800k tax bomb he has to pay. So In total he would have to pay 1.1+ million dollars for 610k.

Meanwhile our taxes are paying for the other 1.3 million dollars.

 

[distressstudent]

There is still the 700k-800k tax bomb he has to pay. So In total he would have to pay 1.1+ million dollars for 610k.

Meanwhile our taxes are paying for the other 1.3 million dollars.

Which would be taxed at 40% after 25 years of inflation (and rule of 72 on 3% is 24 years); so it comes out to be like, he's really responsible for just 20% of the 25 yr outstanding balance. Compared to what he has to pay otherwise, that's a BARGAIN.

There's always an opportunity cost. If he chooses to go through morally right way of paying off his loans, that's money he could have otherwise invested. If he pays the minimum on the loans through IBR, and invest the rest he would have otherwise needed to pay, in 25 years he will have came out way more financially ahead than "doing the right thing". If he is as stupid as everyone says he is and hasn't saved a dime, if he started investing today because of all the backlash, he would still be ahead.

FYI OP makes a living essentially convincing people how much money they can save by going into a loan repayment program vs. paying it off the traditional way. His calculator easily shows all this. If you're in similar situation and thinks that IBR is NOT the way to go, ya'll really need to hire Travis and have him convince you otherwise.

 

[Likkriue]

Which would be taxed at 40% after 25 years of inflation (and rule of 72 on 3% is 24 years); so it comes out to be like, he's really responsible for just 20% of the 25 yr outstanding balance. Compared to what he has to pay otherwise, that's a BARGAIN.

There's always an opportunity cost. If he chooses to go through morally right way of paying off his loans, that's money he could have otherwise invested. If he pays the minimum on the loans through IBR, and invest the rest he would have otherwise needed to pay, in 25 years he will have came out way more financially ahead than "doing the right thing". If he is as stupid as everyone says he is and hasn't saved a dime, if he started investing today because of all the backlash, he would still be ahead.

FYI OP makes a living essentially convincing people how much money they can save by going into a loan repayment program vs. paying it off the traditional way. His calculator easily shows all this. If you're in similar situation and thinks that IBR is NOT the way to go, ya'll really need to hire Travis and have him convince you otherwise.

I’m just curious about the future. Let’s say more and more people sign up for PAYE and you have 10,000 people in 10 years(a thousand a year) with 2 million dollar loan balanced after 20-25 years. Remember Mike Meru graduated way back, tuition was only 300k at USC for him then after interest accrued. Now it’s 500k Interest not counted.

10,000 x a 2 million dollar balance is about 20 billion dollars we have to pay for. This whole system is busted And unethical. And not to mention, unsustainable.

 

[distressstudent]

I’m just curious about the future. Let’s say more and more people sign up for PAYE and you have 10,000 people in 10 years(a thousand a year) with 2 million dollar loan balanced after 20-25 years. Remember Mike Meru graduated way back, tuition was only 300k at USC for him then after interest accrued. Now it’s 500k Interest not counted.

10,000 x a 2 million dollar balance is about 20 billion dollars we have to pay for. This whole system is busted And unethical. And not to mention, unsustainable.

These were the figures from the article:

"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."
So I don't see a 20 billion dollar amount, but yes the figure is still huge.

and he owed usc 600k when he graduated (that's WITH tuition assistance for working at USC). and it wasn't too long ago. just 2012


The whole government loan system is busted. It's not just the student loan repayment portion. But don't expect the "bubble" to pop, because student loans are not secured the same way that mortgages were. It'd just be a slow continuous century long drag on the economy. Unfortunately, it isn't unsustainable (double negative; it IS sustainable). The government has ways to make it work, it just won't be pretty.

Oh by the way. student loans can't be discharged even through bankruptcy. But money owed to IRS CAN be discharged. Which means that 700k tax bomb, if he can't pay it, still won't means he will go to jail (unless IBR forgiveness is written differently for IRS, which i dont think it is). And his house? well it's in his wife's/mother in law name anyways

 

[schmoob]

So In total he would have to pay 1.1+ million dollars for

How is it a taxpayer burden if the government still profits $500K? It would actually be in both the govt and borrower to switch to IBR/PAYE etc. This capital can be used for purchase a practice or other investment. By increasing the income of the borrower, it increases the payment minimum for IBR. Once 20-25 years roll by, the tax bomb would be even higher, creating a higher profit margin for the govt.

It's not dentists or physicians that would be responsible for the collapse of the student loan systems. It's the Failure to Launch crowd with undergraduate and graduate degrees in 16th century German literature, with no job, and living with their parents because they can't find a job. These people default, this is where the loss happens.

 

[899424]

Hi, I'm glad this is being discussed on here because this is important.
This part has nothing to do with the financial aspect of it, but when I read the article last week I noticed that the WSI never referred to the orthodontist as Dr. Meru. That just seems kind of fu^ked to me.

I'm definitely not an expert in finances, but it seems like him and his wife made tons of bad financial decisions. He had a benz while in school when in reality he couldnt even afford the gas to drive it. My advise is don't try to impress anyone. Also, it seems like he makes not so much for an Ortho. I seen denstist positions for 300K. I think dentistry is a lucrative field and this debt could be paid off way way way sooner if he lived a frugal lifestyle and pretty much sacrificed at least five years of his life.

 

[Student Loan Planner]

Did this offer legit happen? That would be such an awesome show!

@Student Loan Planner, do you personally know Dr. Meru? Could you make this happen?

Big Hoss

Here's the problem, Dave Ramsey's advice for Dr. Meru would cost him hundreds of thousands of dollars.

They specialize in getting people out of bad consumer debt situations. Ramsey is totally unaware of the math of how REPAYE and PAYE works.

The net present value of paying it all back would be about $1 million. The NPV of paying it back on PAYE or REPAYE would be around $600,000. That's a $400,000 difference, and a really freaking huge and costly flight to Nashville if he took Ramsey's advice.

 

[Student Loan Planner]

How is it a taxpayer burden if the government still profits $500K? It would actually be in both the govt and borrower to switch to IBR/PAYE etc. This capital can be used for purchase a practice or other investment. By increasing the income of the borrower, it increases the payment minimum for IBR. Once 20-25 years roll by, the tax bomb would be even higher, creating a higher profit margin for the govt.

It's not dentists or physicians that would be responsible for the collapse of the student loan systems. It's the Failure to Launch crowd with undergraduate and graduate degrees in 16th century German literature, with no job, and living with their parents because they can't find a job. These people default, this is where the loss happens.

When someone defaults, the average balance is about $10,000. The government has the power to garnish wages and add 16% collection fees to the student debt, and they can garnish earned income tax credits. On most defaulted loans, the govt earns a profit because of it's extremely powerful collection powers.

Many dentists and dental specialists minimize their cost on the income driven options intentionally, such as showing wages from their S corp. Even if his payment increases it won't be by much.

The Government Accountability Office releases reports every year or so and the expected losses on loans enrolled in IDR plans continues to increase.

Also when you look at present value the taxpayer loses on the majority of loans forgiven on PAYE / REPAYE. We'd be much better off on a different system with caps on amounts allowed to be borrowed, but that's not the world we live in.

 

[Big Time Hoosier]

Here's the problem, Dave Ramsey's advice for Dr. Meru would cost him hundreds of thousands of dollars.

They specialize in getting people out of bad consumer debt situations. Ramsey is totally unaware of the math of how REPAYE and PAYE works.

The net present value of paying it all back would be about $1 million. The NPV of paying it back on PAYE or REPAYE would be around $600,000. That's a $400,000 difference, and a really freaking huge and costly flight to Nashville if he took Ramsey's advice.

https://www.google.com/amp/s/mobile...cs/medicare-social-security-finances.amp.html

The Social Security Trust Fund will run out in 16 years and the Medicare Trust Fund in 8 years. These two programs alone account for 40% of federal spending. The national debt is over $21 trillion, which is more than $170,000 per taxpayer. PAYE and REPAYE are going to cost hundreds of billions more than originally projected. Simply put, the country is dead broke. I have a feeling that those expecting the government to forgive hundreds of thousands of dollars in the future are in for a very rude awakening. In 10 years or so when the feds have to either tell granny she’s getting a 25% haircut to her Social Security or that Dr. Meru has to roger up all that money he borrowed in full, it’s going to be a bad day for Dr. Meru.

Long and short, if you borrowed it, expect to fully pay it back.

Big Hoss

 

[Medin2017]

How is it a taxpayer burden if the government still profits $500K? It would actually be in both the govt and borrower to switch to IBR/PAYE etc. This capital can be used for purchase a practice or other investment. By increasing the income of the borrower, it increases the payment minimum for IBR. Once 20-25 years roll by, the tax bomb would be even higher, creating a higher profit margin for the govt.

It's not dentists or physicians that would be responsible for the collapse of the student loan systems. It's the Failure to Launch crowd with undergraduate and graduate degrees in 16th century German literature, with no job, and living with their parents because they can't find a job. These people default, this is where the loss happens.

I wonder how we can stop people from taking loans and majoring in things with zero job market..

 

[Big Time Hoosier]

I wonder how we can stop people from taking loans and majoring in things with zero job market..

Get the government out of the student loan business. WTF is it doing there in the first place?! Private lenders wouldn't fund a $150,000 undergrad degree in French poetry from a fancy pants liberal arts college. $60,000 for petroleum engineering at XYZ State? Now we are talking.

Big Hoss

 

[doc toothache]

Dave Ramsey is simply a shock jock who has absolutely no idea regarding student loans

Yeah. Debt from student loans is such a different animal that even DR could not possible understand it.

I wonder how we can stop people from taking loans and majoring in things with zero job market..

Get the government out of the student loan business. WTF is it doing there in the first place?! Private lenders wouldn't fund a $150,000 undergrad degree in French poetry from a fancy pants liberal arts college. $60,000 for petroleum engineering at XYZ State? Now we are talking.
Big Hoss

Wouldn't it be Nirvana if we could dictate the choice of subject matter an individual can make and the school they can attend?

 

[Big Time Hoosier]

Wouldn't it be Nirvana if we could dictate the choice of subject matter an individual can make and the school they can attend?

No one should be dictating anything (unless you’re one of my kids, in which case I’ve already decided where you’re going to school and that you’ll major in an engineering field). Let the free market work it all out. You want to take out a ton of student loans to major in something that really should just be a hobby? Go for it! Just don’t come to me looking to bail you out when it all comes crashing down on you and you end up as a barista with $75,000 in student loans.

Big Hoss

 

[doc toothache]

No one should be dictating anything. Let the free market work it all out. You want to take out a ton of student loans to major in something that really should just be a hobby? Go for it! Just don’t come to me looking to bail you out when it all comes crashing down on you and you end up a barista with $75,000 in student loans. Big Hoss

That would be one very lucky barista if all he/she owed was 75K for his/her degree in French poetry.

 

[Big Time Hoosier]

his

Please use gender neutral pronouns or at least provide a trigger warning. Thanks.

Big Hoss

 

[doc toothache]

Please use gender neutral pronouns or at least provide a trigger warning. Thanks. Big Hoss

The post was edited to meet your demand. God forbid it would be the cause of a restless night.

 

[Big Time Hoosier]

The post was edited to meet your demand. God forbid it would be the cause of a restless night.

My 2 year old already makes sure I don’t get a solid night’s sleep, so you’re good.

Big Hoss

 

[allantois]

A lot of this is on dental schools. How do you explain the fact that other programs (medicine, pharmacy, etc) do not charge anywhere near the same amounts of tuition at those same universities?

 

[doc toothache]

Please use gender neutral pronouns or at least provide a trigger warning.Thanks.BigHoss

A lot of this is on dental schools. How do you explain the fact that other programs (medicine, pharmacy, etc) do not charge anywhere near the same amounts of tuition at those same universities?

It may have something to do with the facilities required to train the disciplines you mentioned.

 

[redfish955]

If you save 5,000 a year from 32 to 59.5 you should have about 650k in savings. You should pay off your loans before you start to save unless you are getting 401k funds matching. You can normally pull 4% annualy out of your savings to live off of. If you have 1,000,000 in savings at 58 you should be able to take 40,000 out annually. If you max out a 401k and a roth ira from 32 to 59.5 you should be able to have a 6 figure income at retirement.

 

[2TH MVR]

If you save 5,000 a year from 32 to 59.5 you should have about 650k in savings. You should pay off your loans before you start to save unless you are getting 401k funds matching. You can normally pull 4% annualy out of your savings to live off of. If you have 1,000,000 in savings at 58 you should be able to take 40,000 out annually. If you max out a 401k and a roth ira from 32 to 59.5 you should be able to have a 6 figure income at retirement.

So true and seems simple, but so few ever do this because of the unpredictable nature of life circumstances. Most people are just not disciplined to do this. Living paycheck to paycheck. As your paycheck gets bigger .... so does your appetite for nice things.
Paycheck gets bigger leads to a bigger house. Better car. Possibly a boat or two. Maybe a 2nd home. 529 college savings plan for the kids. Cars for the kids. Insurance. Boat motor blows up, now you need a new motor. Pool and yard maintenance. New golf clubs. Wife loses her diamond earring under her helmet at a go cart racing track and now needs a replacement. Teenage daughter wrecks car. Twice. Family vacations. Wife gets a kidney stone that turns into a life threatening full body sepsis (huge unexpected medical bills). Paying 1st daughter's rent while she finishes college. This list is endless and is ongoing.

So, in principal .... you are correct. But life is unpredictable and finite. Best scenario is to SAVE, invest ..... and ENJOY your life.

 

[redfish955]

Anyone in the upper middle class should live a really good life if they follow this. 28/36 Rule. If you invest that last 8 on a monthly basis your money will go about twice as far as if you took out a loan. Instead of getting a 40k truck on a loan you could get a 40k truck and a 30k boat.