101 Americans With Over $1 Million In Student Loans

Astronomically high college tuition facilitated by a bottomless ocean of student loans has saddled Americans with a record $1.48 trillion in non-dischargeable debt – an amount which has more than doubled since the 2009 lows.

As we reported in January, nearly 40% of student loans taken out in 2004 are projected to default by 2023 according to the Brookings institute.

While in March we noted that debt-laden millennials were set back an average of $140,000 vs. their parents – a problem compounded by the fact that students aren’t just borrowing money for tuition; their student loans cover rent, food and other bills, leaving them with massive interest payments and in many cases, little prospect of getting ahead – much less saving for retirement.

Enter the million-dollar-debtors

While millions of Americans are drowning in student loans – 101 people have the ultimate albatross around their necks; student loan balances exceeding $1 million, according to the Wall St. Journal. Five years ago, there were just 14 people with loans that large.

Utah orthodontist Mike Meru, 37, is one of them. After graduating from Brigham Young University with no debt and a new marriage, Meru borrowed $601,506 debt to attend USC’s orthodontics program – while his new wife Melissa finding work as a USC administrative assistant to save on tuition. After a few years, his student loan had swelled to $1,060,94. 

Mr. Meru said the dental school’s financial-aid director, Sergio Estavillo, estimated that the basic four-year program would require $400,000 to $450,000 in student debt, including interest. Mr. Estavillo said he didn’t recall the conversation but had no reason to doubt its accuracy. –WSJ

And despite Meru’s $225,000 salary in 2017 which leaves him with roughly $13,333 per month after taxes, he makes monthly payments of $1,590 by taking advantage of a government-sponsored debt repayment program. Without the program which still leaves his debt growing at $130 a day, Meru’s monthly payments would be $10,541.91 according to an email from his loan servicer. At this rate, Meru’s loan balance will exceed $2 million in 20 years.

Since refinancing his debt with the federal government in 2015, lowering the rate to 7.25%, Mr. Meru’s balance has grown by $148,948. It will keep growing through the 25-year life of the repayment plan until it reaches $2 million. -WSJ

All is not lost for Meru and many others like him, however – because thanks to the repayment program, Meru’s $2 million balance will be forgiven after 25 years.

He agreed to monthly payments at 10% of his discretionary income, defined as adjusted gross income minus 150% of the poverty level. Any balance remaining after 25 years is forgiven, effectively covered by taxpayers. The forgiven amount is then taxed as ordinary income. -WSJ

And while crushing Meru’s debt load places him in the upper echelon of those drowning in student loans, he attempted to mitigate the financial pain early on, before rates jumped and the snowball began to gather speed.

USC charged tuition of $56,757 in Mr. Meru’s first year, American Dental Association records show. To save on expenses, the couple lived with his parents. He drove a Buick inherited from his wife’s grandmother for the hour-plus trip between Newbury Park and USC, located south of downtown Los Angeles. After his first year, and with his wife’s tuition discount, he owed $43,976.

By Mr. Meru’s second year, the interest rate on new student loans jumped to 6.8%, and USC raised its tuition by 6%. By the end of that school year, he had taken out a total of $115,000 in loans, which also covered a summer semester. Interest rates were roughly triple what he had planned for.

Between Mike Meru and the other 100 people with $1 million or more in student loans, US taxpayers will be on the hook for around $200 million – again, just for those 101 individuals. Unfortunately, that’s just the tip of the iceberg.

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.

…

More than a third of borrowers from one of the government’s main graduate school lending programs have enrolled in some form of federal loan-forgiveness plan. -WSJ

Outraged at his situation, Meru started a national dental-student movement in order to lobby Congress for lower rates on grad students. The effort, according to the Journal, went nowhere. Some dental school educators, meanwhile, have begun to worry about prohibitively expensive tuition.

USC’s dental school is one of the costliest higher educations one can attain – at $91,000 per year, and $137,000 when living expenses are factored in.

“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,” said Dr. Avishai Sadan, dean of USC’s Herman Ostrow School of Dentistry. “But what’s the action?”

Sadan says USC raised tuition “to cover the cost of delivering a top education.” (aka a top-tier dental school can take maximum advantage of the student loan racket).

“You cannot decide you’re just not raising tuition,” he said. “Everything that drives the operation, from salary raises to any other additional costs, have to come, for the most part, from tuition.”

Bottom line: with so many borrowers set to default on their student loans, those who can’t make ends meet will be able to pay roughly 10% of their income for 25 years. The remainder, such as Mark Meru’s $2 million balance, will be an obligation of the United States taxpayer. 

Lord knows the banks who facilitated this scheme aren’t going to cover it.

https://bit.ly/2sc9q0c

Genmab hits roadblock in non-Hodgkin lymphoma

• In a setback for Danish drugmaker Genmab, topline results from a Phase 3 study showed combining the company’s drug Arzerra with bendamustine did not improve progression-free survival in indolent non-Hodgkin lymphoma (NHL) compared to bendamustine alone.
• Arzerra is marketed under a collaboration agreement between Genmab and Novartis, and is approved for chronic lymphocytic leukemia in the U.S. and Europe. The Phase 3 study testing the drug in NHL was sponsored by Novartis.
• A subcutaneous formulation of Arzerra is also under investigation in two Phase 3 clinical studies in relapsing multiple sclerosis. These trials of Arzerra are not affected by the NHL results, Genmab said.

Genmab has sought new indications for Arzerra (ofatumumab), its first marketed product, as the drug is facing increasing competition in the chronic lymphocytic leukemia (CLL) market.

In light of this competition, Genmab’s marketing partner Novartis already has pulled Arzerra from markets outside the U.S. except for compassionate use.

Net sales of Arzerra recorded by Novartis were $36 million in 2017, down 22% from $46 million in the year prior. Genmab’s royalty income on net sales of Arzerra was DKK48 million (approximately $7.5 million) in 2017 compared with DKK63 million (approximately $9.9 million) in 2016.

“We are disappointed that the ofatumumab treatment regimen did not meet the primary endpoint in this trial,” said Jan van de Winkel, CEO, Genmab said in a statement. “The full data will be submitted for publication at a future medical conference and we hope that these will provide a better understanding of this result.”

It’s not clear, however, whether development of Arzerra will continue in NHL.

Genmab has already faced setbacks in Arzerra in NHL and Jefferies equity analyst Peter Welford had only projected $150 million in peak sales.

Elsewhere, in relapsing multiple sclerosis (RMS), recruitment has completed in two Phase 3 trials of a subcutaneous formulation of Arzerra in comparison with teriflunomide. Phase 2 results from the MIRROR study showed the treatment reduced the number of new lesions 12 weeks after starting treatment in people with relapsing multiple sclerosis.

RMS is a competitive field, however, with blockbuster incumbents and a full pipeline of drugs advancing toward market. After some delays, Celgene expects to refile ozanimod for approval in the first quarter of 2019. Merck KGaA’s evobrutinib has positive results in Phase 2. TG Therapeutics’ ublituximab expects to move into Phase 3 in 2019. And Biogen has picked up Alkermes’ ALKS 8700, which is in Phase 3 for relapsing MS.

https://bit.ly/2IKVpkv

California to hospitals: ‘Time’s up’ on unnecessary procedures

• Covered California is putting hospitals on notice to hit specified safety and quality goals or risk losing out in the state’s Affordable Care Act insurance exchange market, WBUR reports.
• Specifically, California’s ACA marketplace is telling participating health plans to exclude hospitals that don’t hit certain goals from in-network status. Those goals include performing fewer unnecessary cesarean sections, prescribing fewer opioids and reducing the use of X-rays and other imaging to diagnose and treat back pain.
• “We’re saying ‘times’s up,’” Lance Ling, chief medical officer for Covered California, said. “We’ve told health plans that by the end of 2019, we want networks to only include hospitals that have achieved those targets.”

The threat should get hospitals’ attention. Tying quality measures to payment size is one thing, but this links performance on specific metrics with even being in a network.

Unnecessary or inappropriate care is a huge problem. The U.S. wastes about $200 billion a year on excess medical tests and treatment, contributing to some 30,000 deaths due to errors and injuries.

C-sections have been on the radar for years. In the past decade, the U.S. rate of C-section births has climbed by 50%, and today a third of all babies have a surgical birth, according to the California Health Care Foundation. Unnecessary C-sections are a concern not just for their cost, which tends to run about 50% higher than a vaginal delivery, but because there is a greater chance of major complications for the mother and baby.

Covered California’s plan may have been influenced by Smart Care California, which launched the Choosing Wisely program last year to reduce medical waste by promoting safer, more cost-effective care. The coalition is initially focused on reducing elective C-sections, opioid use and treatment for patients with lower back pain.

But despite widespread agreement that unnecessary care is bad for patients and hospitals, change has been slow. An analysis in Health Affairsearlier this year found physicians often resist Choosing Wisely recommendations out of concern about malpractice, patient demand and satisfaction and a desire for more information to reduce uncertainty. In one study, 85% of physicians said they fear of malpractice led to overtreatment.

https://bit.ly/2J6iFJ6

Majority of premature infants receive antibiotics without infection

Clinicians should do more to identify premature infants that are at low risk of developing sepsis to prevent unnecessary antibiotic exposure, which has been associated with increased risks of death, according to a new study.

One in 90 very-low-birth-weight infants develop sepsis, and it can kill up to 50% of the babies born between 22 and 24 weeks that develop the infection. But an analysis published Friday in JAMA Network Open found many infants receive antibiotics without evidence of an infection, which can put them at risk for a host of adverse health outcomes, including acquiring antimicrobial-resistant infections, chronic lung disease, necrotizing enterocolitis or death.

“Although very-low-birth-weight premature infants are at higher risk of early-onset infection compared with term-born infants, we found an overall rate of antibiotic initiation that was an order of magnitude higher than the actual incidence of infection,” the study concluded.

The study authors analyzed more than 40,000 inpatient encounters involving premature infants at nearly 300 academic and community hospitals between January 2009 and September 2015.

More than 61% of the centers studied started antibiotic therapy for more than three-quarters of infants who weighed less than 3.3 pounds at birth.

At least 30% of antibiotics prescribed in the United States are unnecessary, according to the Centers for Disease Control and Prevention.

But physicians didn’t change their prescribing patterns from January 2009 through September 2015 despite increased hospital efforts to improve antibiotic stewardship, according to the study. Providers administered antibiotics to 78% of very-low-birth-weight infants within 3 days of birth and 87% of infants with extremely low birth weight, defined as being under 2.2 pounds. More than a quarter of very-low-birth-weight infants and more than one-third of extremely-low-birth-weight infants were exposed to antibiotics for more than five days, which is considered prolonged.

In an accompanying editorial, Dr. Matthew Bizzarro, medical director of the Neonatal Intensive Care Unit at Yale University School of Medicine, wrote that the analysis’ findings and other studies seem to show clinicians aren’t identifying and treating premature infants at high risk for developing sepsis accurately.

“It is therefore the responsibility of individuals who prescribe antibiotics to premature infants to ensure, to the best of their ability that treatment is only administered to those who need it,” Bizzarro wrote.

Study author Dr. Dustin Flannery, a Perinatal-Neonatal Medicine fellow at The Children’s Hospital of Philadelphia, said there is little guidance on early antibiotic use in premature infants. He said more research is needed to “refine the approach” to early onset sepsis risk assessment in premature babies.

Many clinicians preemptively administer antibiotics to premature infants as a means of staving off infections such as sepsis, pneumonia; infection of the fluid that surrounds the brain, meningitis, skin and urinary tract infections because they have underdeveloped immune systems that make them susceptible to a number of pathogens.

But questions have been raised about whether that practice may do more harm than good. A 2016 study published in the journal Nature Microbiology found evidence of antimicrobial-resistant bacteria residing in the gut of premature infants that has raised calls for shorter courses of antibiotic treatment and limiting the number of antibiotics given to premature infants.

In 2001, 8% of the 4.6 million infant stays nationwide were for pre-term birth or low birth weight, according to a 2017 study published in the journal Pediatrics. The costs associated with admissions totaled $5.8 billion, representing 47% of the costs for all infant hospitalizations and 27% for all pediatric stays.

https://bit.ly/2IPxeNQ

Blue Cross of Illinois to pay Medicaid suppliers 35% less

Blue Cross & Blue Shield of Illinois plans to cut Medicaid reimbursement rates by 35% for medical suppliers—apparently an effort to win back business after new enrollees were blocked from the state’s revamped Medicaid managed care program.

Another private insurer, IlliniCare, signaled last fall that reimbursements could be slashed by up to 50%.

The proposed cuts, starting Jan. 1, 2019, cover durable medical equipment—wheelchairs, ventilators and oxygen tanks, for example.

According to a letter this month seeking an amended agreement from providers by June 1, Blue Cross is asking for a payment cap equal to no more than 65% of the state’s Medicaid reimbursement rate.

Blue Cross wouldn’t discuss the letter’s details, but in a statement today it said, “We’re looking to evolve our provider network to better serve our members and realign provider reimbursements to bring us more in line with industry standards.”

Last month Medicaid overseer Illinois Department of Healthcare & Family Services barred enrollment to Blue Cross just as Medicaid recipients are choosing providers under a revamped managed care system called HealthChoice Illinois. It debuted Jan. 1 and rolled out statewide three months later.

Blue Cross was displaced as the insurer with the largest number of enrollees in HealthChoice Illinois as of April 1. Its enrollment increased 8.5%, to 469,384, while regional carrier Meridian Health Plan’s soared by 27.5% to 546,663.

Total enrollment was up even more, by 30%, to 2,249,704, according to state enrollment data, buttressed by a 67% surge in IlliniCare’s numbers to 341,300. CountyCare, owned and operated by the Cook County Health & Hospitals System, reported flat enrollment, at 332,243.

HFS, which also fined Blue Cross $150,000, said the insurer failed through its network of doctors and hospitals to provide enough patient access, while inadequately addressing a backlog of grievances and appeals from its enrollees.

In a statement at the time Blue Cross said it was “committed to making the necessary investments and improvements in technology, process, staffing and training to provide long-term solutions to meet the needs of all our (Medicaid) members.”

The letter to providers from Christa Mitchem, manager of auxiliary contracting, said that Blue Cross seeks to ensure that reimbursement amounts for member services “promote a stable and sustainable Medicaid program.”

In a statement in November IlliniCare said the carrier works “with our providers and vendors to align with the Medicaid program and be good stewards within its financial structure.”

https://bit.ly/2J7Ot03

Reporter who exposed Theranos 'tells how to spot another Elizabeth Holmes'

After years of unquestioning praise, Theranos was exposed due to WSJ reporter Carreyrou’s dogged reporting. His new book, Bad Blood, tells the full story.

 

 

 

The Theranos story got everyone’s attention because it involved all the ingredients for a classic drama—hubris, greed, big personalities, and fraud. The blood-testing tech startup’s rise and fall, from a $9 billion valuation and CEO Elizabeth Holmes posing for magazine covers to revelations that its technology didn’t work and being targeted with multiple federal and state investigations, is by now legendary. But the story wouldn’t have been told without the reporting of the Wall Street Journal‘s investigative dynamo John Carreyrou, who doggedly asked the tough questions that punctured the unicorn’s facade and exposed Holmes’s lies.

Carreyrou tells the tale in his new book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, which goes on sale on Monday, May 21, and has been optioned for a feature film starring Jennifer Lawrence and helmed by The Big Short director Adam McKay. I talked with Carreyrou about how he first suspected that Theranos might not live up to the hype and what he advises journalists and investors in approaching Silicon Valley’s freshest and shiniest startups.
Fast Company: What made you first suspect that something might be a little fishy about Theranos?
John Carreyrou: The absolute first tip-off was reading the Ken Auletta profile in the New Yorker. Even though [Elizabeth Holmes] had risen to fame six months prior, she only got on my radar screen with that story.
I read it with interest and some of the details struck me as off—one of them was that she’d dropped out of Stanford after only a year and a half to start a medical startup. And I thought that was weird. You can do that with computer stuff but not really with science and medical research. And another thing was the absence of peer review publications, which Ken Auletta to his credit pointed out. And also her quote summarizing how the technology worked. I thought that was ham-handed.

 

 

But to be fair, I probably wouldn’t have done anything if I hadn’t been approached by Adam Clapper, a blogger who’d written a short skeptical item pegged to the New Yorker story. And [inventor-entrepreneur] Richard Fuisz got in touch with him and the Fuiszes had him talk to [Stanford professor of medicine] Phyllis Gardner and he was like, “Wow! This is indeed interesting but it seems kind of second-hand.”
I had the same reaction—this is all interesting but I need a primary source. The game was to get to the lab director who had just left the company, and getting him to talk to me on deep background was hard. He was terrified, and then it was all about getting corroboration.

FC: What is your advice for journalists covering Silicon Valley, where there is so much cheerleading by the media?
JC: Everyone out there covering the Valley should have some healthy skepticism and not fall into the trap of cheerleading all the time. I think that Silicon Valley has become one of the most fascinating beats in the country. If you’re a journalist today, it’s really become an important part of the American economy—all this innovation but all this pretending and rule-breaking and these larger-than-life personalities. It’s a fascinating beat. I would love, if I were a young reporter in the early part of my career, I would really be happy to cover Silicon Valley.
FC: What questions should investors be asking of startups like Theranos?
JC: People like Larry Ellison and Tim Draper invested in companies like Theranos when they’re just starting out. The odds are that most will fail and maybe a few will do okay and one will really hit it big. That equation isn’t going to change.
The Theranos story is a lesson for investing when startups are at a later stage. Theranos raised most of hits money when it was over 10 years old. You need to do due diligence: What happened in the previous 10 years? What are the revenues and profits and the CFS [consolidated financial statement]. Investors didn’t ask for the CFS or asked for it and were rebuffed.
FC: That’s amazing that some didn’t ask for something as basic as the CFS.

 

JC: What Holmes did very successfully was that she positioned Theranos as a classic tech company and investors allowed her to do that. In tech, maybe you need to do less digging and less forensic due diligence because it comes down to programming and coding. But actually, Theranos was first and foremost a medical technology company—that involves medical research and science.
Those investors who came in after 2013 allowed her to make them forget that. They should have been asking those questions, hiring scientific consultants to ask how she had solved problems in physics and chemistry that thousands of researchers had struggled to do.
FC: Have investors learned their lesson? Are they asking those questions now?
JC: Right now, there’s a convergence of traditional tech and medicine in the Valley and that’s a trend that will only increase.
The medical industry can only benefit from the boldness and imagination of Silicon Valley. But people need to always remember that as soon as you enter the medical realm you have the lives of patients at stake. You have to be transparent with your science.
There is no science without peer review. People who know a thing or two about science need to be able to verify.

And regulation—there’s a reason that the medical industry is the most tightly regulated industry in the country.
https://bit.ly/2LfXwuh

Scientists are declaring war on leukemia-causing virus that has infected millions

The discovery of the first human retrovirus in 1980 was a minor scientific sensation. Researchers knew retroviruses—which transcribe their RNA genome into DNA and integrate it into a host cell’s genome—existed in animals. But until Robert Gallo, then at the National Cancer Institute in Bethesda, Maryland, found the human T-cell leukemia virus-1 (HTLV-1), some doubted that retroviruses infect humans. HTLV-1 was soon eclipsed, however, by another retrovirus that would go on to kill more than 35 million people and keep generations of scientists busy: HIV. “If you were working on retroviruses you switched to HIV,” says epidemiologist Antoine Gessain of the Pasteur Institute in Paris.

But in a 10 May open letter to World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus, Gallo and 59 other virologists, epidemiologists, and patient advocates call for a global effort to eradicate HTLV-1, which infects millions and causes cancer and several other diseases. Just like HIV, HTLV-1 spreads through blood, semen, and breast milk, and the letter argues that the testing and prevention strategies used against HIV should be employed to stop HTLV-1.

HTLV-1 is nowhere to be found among the many dozens of diseases on fact sheets on WHO’s website; it’s not recognized as a neglected tropical disease and isn’t on WHO’s list of sexually transmitted diseases either. “I still scratch my head about how we managed to stay on the margins of HIV and of sexual health,” says Graham Taylor, who studies HTLV-1 at Imperial College London.

The virus probably jumped from monkeys to humans somewhere in Africa tens of thousands of years ago; the slave trade helped spread it around the world. Today, scientists estimate that 5 million to 10 million people are infected, but the real number is probably much higher, Taylor says. One hot spot is southern Japan, where up to 6% of pregnant women have been found to carry the virus. But poor countries are most affected, which partly explains the neglect, Gallo says. In Jamaica and other Caribbean islands, about 6% of the entire population may carry the virus. Parts of Brazil have high rates, millions are infected in Africa, and in some aboriginal communities in Australia, almost half the people over age 50 are infected, a recent study found. Europe and the United States can’t rest easy, Taylor says: “If we are not careful, this could become more prevalent in our communities without us being aware. … As other infections like HIV come under control, people’s behavior may change.”

Most people infected with HTLV-1 never have symptoms, but about 3% to 5% develop adult T-cell leukemia, a cancer that kills patients after 8 to 10 months on average and for which treatment has not improved in the past quarter-century. Another 4% develop tropical spastic paraparesis, a disease similar to multiple sclerosis. Other inflammatory diseases and immune deficiency have also been reported, and an Australian study published in March showed that those infected with HTLV-1 are more likely to develop bronchiectasis, a disease in which parts of the airways are enlarged, and to die from it.

Yet HTLV-1’s modest death toll, and the decades that often go by between infection and disease, have kept it out of the limelight. In response to the letter, a WHO spokesperson pointed out that another virus, hepatitis B, causes more than 400,000 cancers each year worldwide. In contrast, the International Agency for Research on Cancer estimates that only 3000 cancer diagnoses annually are directly linked to HTLV-1. Taylor thinks the real number is higher, but he says, “I really don’t think this should turn into a ‘my disease is more important than your disease’ competition.”

Routine testing for HTLV-1 should be available in sexual health clinics everywhere, the researchers write in the letter, and mothers in endemic regions should routinely be screened for HTLV-1 and advised not to breastfeed if they are infected. Since antenatal testing was introduced in Japan’s Nagasaki region in 1987, the infection rate in the population has dropped from 7.2% to 1%. The letter also calls for universal HTLV-1 testing of blood and organ donors, because transplants have transmitted the virus, albeit rarely. “I honestly believe that nobody should have a transplant where the donor has not been tested for HTLV-1,” Taylor says. (Until 2009, the United States did screen organ donors, but the practice was stopped because false positive results were disqualifying too many healthy organs.)

Gallo believes renewed attention to HTLV-1 could have broader benefits. In the early 1980s, the virus sped up the discovery of HIV, he says, because it alerted scientists to the possibility that a retrovirus might be causing the mysterious new syndrome called AIDS. Today, a better understanding of HTLV-1’s powerful carcinogenic properties may lead researchers to new insights about cancer, Gallo says.

https://bit.ly/2krThPY