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Detroit expecting $195M lump sum from Michigan

By WTOP Staff

ED WHITE
Associated Press

DETROIT (AP) — Detroit is counting on a lump sum of $194.8 million from the state to shore up pensions and prevent the sale of valuable art as it tries to emerge from bankruptcy later this year, the city said Monday.

The details were in Detroit’s latest strategy plan filed in bankruptcy court. It comes just days before ballots go out to thousands of creditors, including retirees and city employees personally affected by the largest public bankruptcy in U.S. history.

Detroit emergency manager Kevyn Orr went to the Capitol last week to lobby Michigan lawmakers on a pension rescue. The latest disclosure means he’s banking on a lump sum instead of annual payments over 20 years. The payment from the state is being treated as the current value of shelling out $350 million over two decades.

“The thinking from the pension funds is it’s better to have the money in hand rather than worry about it over time,” said bankruptcy expert Doug Bernstein. “The risk shifts to the pension funds to get a return on the investment.”

But it’s not a done deal. The Republican-controlled Legislature still needs to embrace it, and no money would be given if retirees and city employees reject the pension changes.

Finally, Detroit’s bankruptcy plan would have to be approved by Judge Steven Rhodes by the end of September. Foundations and philanthropists have to kick in millions of dollars as well, putting the total value of the pension rescue at $816 million.

A spokesman for House Speaker Jase Bolger, R-Marshall, said legislation could be introduced this week, although the style of payment still is unsettled.

“He wants to look at the best deal for taxpayers both in the short term and long term,” Ari Adler said.

Separately in the bankruptcy plan, the city said it would make payments of $450 million and turn retiree health care over to trust funds run by boards, similar to what has happened in the auto industry. Death benefits would be eliminated.

Detroit “shall have no further responsibility to provide retiree health care or any other retiree welfare benefits,” the plan states.

Police and fire retirees would not lose pension benefits, but their annual cost-of-living allowance would be trimmed to 1 percent. Other city retirees would see a 4.5 percent pension cut and the elimination of cost-of-living payments. There is a possibility of recovering that money if the health of the two pension funds improves.

Rhodes signed an order Monday accepting a 200-page document from the city that describes the history of Detroit’s financial woes and the way out. It accompanies the bankruptcy plan and clears the way for ballots to go out.

Detroit population’s peaked at nearly 2 million in the 1950s but fell to under 700,000 by the end of 2012. Even by 2023, the city doesn’t believe it will match the $276 million in income taxes collected in 2008.

“There is no non-bankruptcy solution to the problems facing the city, its stakeholders and its residents,” the city said.

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Associated Press writer David Eggert in Lansing, Mich., contributed to this report.

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Follow Ed White at http://twitter.com.edwhiteap

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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