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Detroit manager: Bankruptcy challenges costly

By WTOP Staff

COREY WILLIAMS
Associated Press

DETROIT (AP) — Court battles with one of Detroit’s most antagonistic creditors would have been costly and had the potential to delay the city’s restructuring efforts, city emergency manager Kevyn Orr testified Thursday.

Orr, the key witness this week in Detroit’s bankruptcy trial, described a contentious relationship with New York-based Syncora Inc. that ended last month when the city reached a deal with the bond insurer on about $400 million in debt.

Syncora had opposed the city’s use of some casino tax revenue, Detroit’s bankruptcy eligibility and a loan to improve quality of life for residents, Orr said.

“They filed litigation to just about everything we were trying to do through the course of the bankruptcy,” Orr testified under questioning by an attorney representing Detroit. “It was costing the city not an insignificant sum of money to defend the city from those litigations. We anticipated it was going to be over $5 million to $10 million.”

The fight also would have taken time, several years even.

“I expected them to go all the way up to appeals — to the (U.S) Supreme Court,” Orr said.

Thursday was Orr’s second day on the witness stand before federal Judge Steven Rhodes, who has to decide whether the city’s plan to remove $7 billion in debt is fair to creditors.

Under a deal reached Sept. 9, Syncora is getting cash and long-term leases on a parking garage and the tunnel between Detroit and Canada, among other concessions.

That leaves another bond insurer, Financial Guaranty Insurance Inc., as the lone major creditor opposing the bankruptcy. Its claim is about $1 billion.

Orr testified Thursday during questioning by a Financial Guaranty Insurance attorney that it was important for the city to move swiftly through the bankruptcy during his 18-month appointment as emergency manager. His contract expired last month, but Orr reached a deal with the mayor and city council to remain in his post through the bankruptcy trial.

Orr was hired by state in March 2013 to fix Detroit’s finances. That July, he made Detroit the largest U.S. city to file for bankruptcy.

His debt-restructuring plan includes $1.7 billion to improve police, fire and other services to city residents over the next decade. Some of the money also would be used to demolish scores of vacant houses and remove blight across the city.

Orr also was questioned on various topics associated with the bankruptcy, including the city’s poor track record of collecting taxes.

He said the city currently is collecting only about 50 percent of its property taxes, but dares not raise them.

“You’ve saturated the tax-paying body with so many taxes, it’s unsustainable,” Orr said, adding that, too often, it leads to people abandoning their homes. “It’s easier to walk away.”

Empty houses create blight, which lowers property values and forces more families to leave the city, he added.

Detroit’s population is now about 685,000, Orr said, more than a quarter-million fewer than in 2000.

“Do you want the city to be 500,000? Do people want the city to be 350,000?” Orr asked. “It can’t happen.”

Testimony will resume Friday morning.

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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