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Michigan Legislature OKs $195 million for Detroit

By WTOP Staff

DAVID EGGERT
Associated Press

LANSING, Mich. (AP) — The Michigan Legislature’s $195 million lifeline to help prevent steep cuts in Detroit’s pensions and the sale of city-owned art is being hailed as a major step forward in ending the largest public bankruptcy in U.S. history.

The state funds will join commitments from 12 foundations and the Detroit Institute of Arts to shore up Detroit’s two retirement systems. The city’s art museum and its assets would be transferred to a private nonprofit.

A delighted Republican Gov. Rick Snyder and allies are hoping Tuesday’s approval of the state money will immediately persuade tens of thousands of retirees and city workers to get behind the unusual pension and art rescue. They are in the midst of voting on the deal their leaders — and now lawmakers from both parties — have endorsed.

“I clearly encourage everybody to vote ‘yes,'” the governor said during a news conference. “A protest vote is not helpful.”

While there are many moving parts to state-appointed emergency manager Kevyn Orr’s restructuring plan, the pension agreement is viewed as a centerpiece. If the retirees and employees do not support it, $816 million from the state, foundations and the Detroit Institute of Arts would vanish and deeper pension cuts could become inevitable.

The trial on the city’s case will be held this summer.

“This has been unbelievable,” U.S. District Judge Gerald Rosen, the chief mediator between the city and its creditors, said of legislators coming through with the financial package.

Despite conservative groups’ opposition to bailing out Detroit, the Republican-led Senate voted 21-17 to pass the main bill allocating the $194.8 million.

Snyder said he will sign the legislation in a day or two.

“This is a good solution. This is a way we can support one another and again make it Detroit, Michigan, instead of Detroit versus Michigan,” he said.

By backing the deal, the governor and legislators are hoping to avoid a protracted bankruptcy and the potential for city retirees to fall into poverty, which could cost the state an estimated $270 million in social safety net costs over 20 years. They also say that Michigan as a whole cannot succeed unless its largest city is turned around.

“This is by far, in my opinion, the best that we’re going to be able to do,” said Senate Majority Leader Randy Richardville, R-Monroe.

Bond insurers have pointed to the art collection — which includes Van Gogh’s “Self Portrait” — as a possible billion-dollar source of cash in the 10-month-old bankruptcy case. The city firmly opposes that, and instead is banking on the separate deal brokered by mediators that would protect the art forever and limit base pension cuts to no more than 4.5 percent instead of as much as 26 percent.

The up-front state payment, the equivalent of $350 million spread over 20 years, would come from the state’s savings account and would be repaid with annual $17.5 million withdrawals from Michigan’s tobacco settlement over 20 years. A state-dominated board would oversee the city’s finances for as few as three years or for decades, depending on whether its books are balanced.

Sen. Coleman Young II, D-Detroit, said the bills would keep the city “under the rule of unelected cronies for Lord knows how long.”

And Sen. Patrick Colbeck, R-Canton Township, pointed to financial problems in Wayne County — which includes Detroit — and other cities such as Flint and Highland Park.

“Are we going to dip into the rainy day fund to bail out all these communities?” he said. “We continue to box ourselves into dead-end solutions that lead to bigger government.”

Among those supporting the legislation was Ryan Plecha, a lawyer for the Detroit Retired City Employees Association, who said members are seeing reduced health care benefits and sharply rising out-of-pocket costs and stand to see a 4.5 percent pension cut and no cost-of-living increases. As part of the deal, retiree groups will withdraw pending lawsuits and release Michigan from future claims that retirees are owed their full pensions under the state constitution, he said.

“Honestly, it would be easier to recommend a fight to the end. But that is not in the best interest of retirees,” Plecha said.

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Follow David Eggert at http://twitter.com/DavidEggert00

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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