$1M in student loans? How one orthodontist racked up an extraordinary debt—and why his story may become more common.

Editor's note: This popular story from the Daily Briefing's archives was republished on Feb. 7, 2020.

Health care professionals are seeing significant increases in tuition and student-loan interest rates, resulting in swelling six-figure debt.

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US student loan debt

Congress in 2005 created a program called Grad Plus that lifted limits on the total amount of graduate student loans, allowing students to take out loans to cover costs related to tuition, rent, and other living costs. According to the Wall Street Journal, the program was designed to ease graduate student's reliance on private loans to finance their education, as those loans typically offer stricter repayment plans and unlike the federal government do not offer loan forgiveness plans.

According to the Journal, as a result of these higher limits, the rising cost of tuition in the United States, and the ease of securing student loans, student loan debt has soared.

While a typical student borrower owes $17,000, students who pursue advanced degrees in health care—ranging from dentistry to pharmacy—often face higher tuitions, which prompts them to borrow more in student loans to cover their tuition and living costs, the Journal reports.

According to the Association of American Medical Colleges' (AAMC) annual survey, about 74% of new medical school graduates in 2016 had student loan debt. The survey found debt levels for new medical school graduates increased from $125,372 in 2000 to $190,000 in 2016, after being adjusted for inflation in constant 2016 dollars.

Meanwhile, the American Association of Colleges of Nursing's (AACN) 2017 Graduate Nursing Student Loan Survey found 69% of nursing school graduates took out federal student loans. The median graduate student loan debt for nursing students was between $40,000 and $54,999. Sixteen percent of students had at least $100,000 in student loan debt.

According to the Journal, dentistry in 2015-2016 had the highest average tuition for a full-time student attending for a full year. Urban Institute data showed average annual tuition for private nonprofit schools during the 2015-2016 was $71,820.

As average student loan debt has ballooned, so too have the number of students with extraordinary debt levels. Data from the Department of Education show the number of U.S. residents owing at least $1 million in federal student loans grew from 14 in 2013 to 101 in 2018. In the coming years, more U.S. residents could owe at least $1 million, the Journal reports, noting that the number of U.S. residents who owe at least $100,000 has increased to about 2.5 million people, representing about 6% of all federal student loans, Department of Education data showed.

How one orthodontist racked up $1,060,945.42 in student loans

Mike Meru, an orthodontist in Draper, Utah, is one of the 101 students with more than $1 million in federal student loan debt, the Journal reports

Meru attended the University of Southern California (USC,) one of the costliest dental schools in the country. At the start of his program, Meru said, USC estimated that the basic four-year program would require Meru to take out $400,000 to $450,000 in student loans, including interest.

After his first year, USC's tuition rose by 6% and his student loan interest rate jumped from 4.75% to 6.8%. During his third year, USC raised tuition by another 6%. By the end of his fourth year of school, Meru had taken out about $340,000 in student loans, which the Journal notes was still in line with the school's initial projections.

However, those projections did not take into account the fact that most dental residencies take place at universities that charge residents tuition. By the end of his three-year residency, Meru had borrowed $601,506 in student loans. At that time, he decided to use a government option known as forbearance to postpone payments and use his new salary to support his growing family. However, interest continued to accrue during that time period, and between the interest and related fees, the Journal reports Meru now owes $1,060,945.42 in student loan debt.

In 2015, Meru refinanced his debt with the federal government and entered a 25-year repayment plan under which he makes monthly student loan payments equal to 10% of his discretionary income—which is defined as his adjusted gross income minus 150% of the poverty level. For Meru, that comes out to $1,589.97 a month—which is not enough to cover the interest on his student loans, meaning that his debt grows daily by $130. According to the Journal, Meru's debt under his current repayment plan is projected to continue to rise over the next 25 years when it will reach $2 million, at which point, the remaining sum will be forgiven. Under Meru's plan any sum beyond 25 years qualifies for loan forgiveness, the Journal reports. By that time, Meru is projected to have paid a total of about $1.6 million, according to the Journal.

His wife, Melissa Meru, said she and her husband focus on raising their two daughters instead of thinking about her husband's debt. She said, "If you thought about it every single day, you'd have a mental breakdown."

Out of frustration, Mike Meru decided to start a national movement to lobby Congress to lower the interest rates graduate students face on student loans. His efforts haven't generated any results.

What organizations, universities are doing to help

To help students with debt, the AAMC and medical schools are offering students financial information and tools. For example, AAMC's FIRST program and other university programs offer personal finance education and counseling for students.

Julie Fresne, director of the AAMC's office of student financial services, said, "There is a concern that the cost of medical school will deter otherwise qualified and underrepresented candidates." Fresne added, "We've got to get to people younger, earlier; we've got to help them understand that they can afford a career in medicine."

Avishai Sadan, dean of the USC's Herman Ostrow School of Dentistry, said, "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" of entering dentistry. He said, "But what's the action?" He added, "You cannot decide you're just not raising tuition. Everything that drives the operation, from salary raises to any other additional costs, have to come, for the most part, from tuition."

He added that students are making "choices" about which schools they attend and are not being "coerc[ed]" into attending schools with high tuitions. Sadan said that students "know exactly what they're getting into" (Mitchell, Wall Street Journal, 5/25; Wisenberg Brin, AAMCNews, 4/4; AACN student loan survey summary, accessed 5/29; U.S. News & World Report debt rankings, accessed 5/29).

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