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Puerto Rico governor approves balanced budget

By WTOP Staff

DANICA COTO
Associated Press

SAN JUAN, Puerto Rico (AP) — Puerto Rico’s governor on Tuesday signed the U.S. territory’s first balanced budget in more than a decade amid an economic slump that has concerned U.S. investors.

The $9.6 billion budget was approved on the same day the fiscal year began, with the island’s House of Representatives approving the final version late Monday after legislators warned just days ago about a $200 million gap.

Gov. Alejandro Garcia Padilla noted that he fulfilled a key promise with the new budget: “We achieved this without laying off public workers or new taxes.”

The budget allocates $4.9 billion for operational costs and calls for the fusion of several government agencies as a way to cut costs. The budget is down $205 million from last year’s budget.

Approval of the budget comes amid growing concerns about Puerto Rico’s economy, with Garcia having signed a law Saturday that allows certain public corporations to restructure their debt if needed. He said the law in part aims to protect the general fund, which has long financed Puerto Rico’s public agencies, but the move prompted credit rating agencies to further downgrade bonds issued by those corporations.

On Tuesday, Moody’s announced that it also was downgrading $14.4 billion worth of outstanding Puerto Rico general obligation bonds. The U.S. territory was able to sell a record $3.5 billion in such bonds in March despite having its credit rating downgraded to junk status.

Moody’s cited the new law as the main reason for the latest downgrade.

“It signals a depleted capacity for revenue increases and austerity measures, and a new preference for shifting fiscal pressures to creditors, which, in our view, has implications for all of Puerto Rico’s debt,” Moody’s said.

Garcia criticized Moody’s and said he had ordered the island’s justice secretary to take action, including possibly filing a lawsuit.

“This credit rating agency and any other agency that takes similar action will have to answer to this affront in court,” he said in a statement. “They need to know that if they want to govern Puerto Rico, they need to seek candidacy.”

The governor’s office later recalled the statement, but gave no explanation nor issued a new statement.

Legislators and officials also criticized downgrades announced last week for the island’s three largest corporations, including the state-owned power and water and sewer companies. Analysts noted the Electric Energy Authority has some $671 million in debt that matures in July and August, leading to speculation it might seek to restructure its debt.

The Franklin Templeton and Oppenheimer investment funds filed a lawsuit Saturday arguing that the law is unconstitutional.

Puerto Rico is entering its eighth year in recession as it struggles to reduce $73 billion in public debt and battles a 13.8 percent unemployment rate, the highest compared with any U.S. state. Thousands of public workers have organized protests and strikes in recent weeks in response to a fiscal emergency law that calls for austerity measures.

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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