When student loans bite down hard

When student loans bite down hard
May 29, 2018 Bob Allen

This story that appeared last week in The Wall Street Journal has generated a lot of interest and referrals from other websites, generating a good deal of overt and implied aggregation aggravation. So as not to violate the sanctity of The Journal’s paywall, the gist is this.

Mike Meru, a 37-year-old orthodontist in Utah, owes $1,060, 945.42 in student loans. And despite monthly payments of $1,589.97, it’s growing by $130. Which means in 20 years, he’ll owe $2 million.

About the only thing missing from this math problem are the two trains traveling toward each other at different speeds, so we can guess when they’ll collide.

But meantime, it’s not unreasonable to think that Mike Meru is a train wreck. And this story points out he’s not alone: 100 other Americans have student loan debt topping $1 million.

It’s worth noting that Meru had no debt when he graduated from Brigham Young University. But then came dental school at the University of Southern California. Here he got into trouble. He also relied on people such as the dean of the dental school, who told The Journal:

“These are choices. We’re not coercing. You know exactly what you’re getting into.”

So we know this is a good dental school because they appear to be really good at washing their hands.

I have written already about student loans and my own experience. They are pernicious. They can force you to make ill-advised decisions. In my case, I delayed saving for retirement by about a decade. This story notes the ramifications of that, specifically: “For every 10 years you delay saving for retirement, the amount you need to save monthly roughly doubles.” That has been my experience.

In recent weeks, stories about student loans and the student loan debt crisis have taken on a Malthusian momentum. One quotation has stood out: “The magic of compound interest is working on the side of the lender.” This at the very moment we’re trying to get young people to save more and save it earlier to benefit from the aforementioned magic.

Actually, in the case of student loans, I’d call it the tragic of compound interest.

And as easy as it is to use the story of Mike Meru as clickbait and chum for the comments field, his story is still sad, even tragic. More tragic will be if, while shrugging off his plight as some sort of fiscal freak show, we shrug off the student loan debt that’s sucking the life out of young people even before that have a chance to live that life.

I just hope that finding the solution, whatever it is, doesn’t require pulling teeth.

—Bob Allen

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