Rising college tuition and meritless loaning practices by the federal government has led to a massive increase in the number of student borrowers with super-sized student debt.
There are 101 borrowers who owe at least $1 million in federal student, a 621-percent increase from just five years ago when 14 borrowers owed that much, according to Department of Education data obtained by The Wall Street Journal.
Orthodontist Mike Meru, 37, is one of those borrowers. Meru borrowed $601,506 to attend the University of Southern California’s program, he told The WSJ. Within a few years, his debt had swelled to $1,060,945.
Meru, who earned $225,000 as an orthodontist in 2017, makes monthly payments of $1,590 against his debt on a government-sponsored repayment plan, but that isn’t enough to cover the interest. His debt grows $130 a day, meaning his loan balance will exceed $2 million in two decades.
After 25 years, Meru’s remaining balance will be forgiven at taxpayers’ expense.
More borrowers are at risk of joining Meru in the million-dollar student debt club — some 2.5 million borrowers owe at least $100,000 in federal student loans, according to the Education Department.
The federal government divvies out billions of dollars in loans to students without considering a student’s chosen area of study or their ability to pay back the loan, leading to high rates of default. (RELATED: Students Pursuing Risky Degrees Draw Over $25 Billion In Yearly Federal Loans)
The Department of Education loaned $25.9 billion in 2016 alone to students who chose degrees under the umbrella of the liberal arts and humanities, majors that have higher rates of default than business, vocational and STEM majors, according to the Federal Reserve Bank of New York.
(Graph: Daily Caller News Foundation/Andrew Kerr)
But a student’s chosen area of study is not considered by the federal government prior to giving a loan, nor are high school grade point averages taken into consideration, despite the fact that studies have found that high school GPA is a strong predictor of college graduation rates and future earnings.
Upward of 29 percent of student borrowers will ultimately default on their loans, according to a Brookings Institution estimation.
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