Revisiting Mike Meru’s $1M Student Loan

As I was reflecting on 2018 over the New Year, I recalled Dr. Mike Meru’s story of a 1 million dollar student loan. In May 2018, the Wall Street Journal published an article about Dr. Meru’s student loan balance – which had exceeded 1 million dollars.

If you subscribe to the WSJ, you can read the full story here: https://www.wsj.com/articles/mike-meru-has-1-million-in-student-loans-how-did-that-happen-1527252975

While Dr. Meru is an extreme case, he’s not alone, and it is becoming more common. Dave Ramsey opines on Dr. Meru’s mess in the YouTube video below (if you are reading this email in your inbox, click on the title of this post to be taken to the webpage where you can view the video) :

One thing to note is that Dave mentions transferring to a cheaper school. Transferring from one dental school to another is basically impossible. Yes there are a few transfers between schools each year but these cases are few and far between and usually involve special circumstances. Furthermore, if a student were to start dental school and then leave dental school, it’s unlikely that the same student would get another opportunity to gain acceptance to another institution – that’s just the “way it works”.

I’ve said that dental school is too expensive before, but articles like these highlight how quickly debts of this size can get out of hand. REPAYE’s 50% interest subsidy will ease the pain of these “JUMBO” student loans; however, a $1M student loan will leave almost all dentists in financial ruin at today’s interest rates.

I have discussed student loans with several dental students expecting to graduate with a balance of more than $500,000 recently. Most of these students do not expect to specialize and I would expect their student loan balance to grow for several years after graduation until they find stable employment within a practice that can afford an associate or ditch the search for such a job and purchase a practice with strong cash flow. For those of you with jumbo student loans like these, my best advice for you is:

1. Specialize.
2. If #1 is not on the table, discuss with your spouse where in the US you will would be willing to move after graduation.
3. If #1 is not on the table, do what you can now, to prepare for practice ownership.