An Act to amend the Bankruptcy and Insolvency Act (student loan)

This bill was last introduced in the 38th Parliament, 1st Session, which ended in November 2005.

Sponsor

Alexa McDonough  NDP

Introduced as a private member’s bill. (These don’t often become law.)

Status

Not active, as of Oct. 20, 2004
(This bill did not become law.)

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Post-Secondary EducationStatements By Members

April 22nd, 2005 / 11:10 a.m.
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NDP

Alexa McDonough NDP Halifax, NS

Mr. Speaker, during the 2004 election the Prime Minister promised to reinvest $8 billion, which he in fact had cut, back into post-secondary education core funding. In a spectacular betrayal, the 2005-06 budget did not contain a red cent toward keeping that promise. Another promise made, another promise broken, with disastrous consequences.

At Dalhousie University in my riding for example, medical, dentistry, law and international students face tuition hikes of over 9% this year. Some medical students, graduating with debts in excess of $100,000, are faced with a government that will not even extend interest relief while they are completing their residencies.

Last week Liberal members voted down my private member's bill that would have reversed Liberal imposed discrimination and at least would have allowed the most desperate students to qualify for bankruptcy relief two years after completing their studies. My plea to government members to send Bill C-236 to committee to allow MPs--

Bankruptcy and Insolvency ActPrivate Members' Business

April 13th, 2005 / 3:20 p.m.
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Liberal

Don Bell Liberal North Vancouver, BC

Mr. Speaker, I wish to indicate I was voting for Bill C-236.

And the Clerk having announced the result of the vote:

Bankruptcy and Insolvency ActPrivate Members' Business

April 13th, 2005 / 3:05 p.m.
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The Speaker

It being 3:09 p.m. the House will now proceed to the taking of the deferred recorded division on the motion at second reading stage of Bill C-236 under private members' business.

Call in the members.

Before the Clerk announced the results of the vote:

Business of the HouseGovernment Orders

April 12th, 2005 / 4:55 p.m.
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Liberal

Karen Redman Liberal Kitchener Centre, ON

Mr. Speaker, discussions have taken place between all chief whips and there is an agreement, pursuant to Standing Order 45(7), that the recorded divisions scheduled for Wednesday, April 13 on Bill C-236, Bill C-263 and Bill S-3 take place at 3 p.m. rather than at the beginning of private members' business.

Bankruptcy and Insolvency ActPrivate Members' Business

April 6th, 2005 / 6:10 p.m.
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Liberal

Roger Valley Liberal Kenora, ON

Mr. Speaker, the Bankruptcy and Insolvency Act is one of Canada's key marketplace framework laws promoting both economic and social stability. Indeed, it is unique in its dual economic and social orientation encouraging commerce and entrepreneurship while ensuring that vulnerable individuals have a means of dealing with unmanageable debt. The statute has been crafted to reflect the balance between these orientations.

The Bankruptcy and Insolvency Act balances the risk between creditors and debtors in determining how shortfalls will be allocated and setting out the circumstances under which a fresh start is warranted. It encourages the payment of debts while allowing well-intentioned but unfortunate debtors a means of eliminating their debt loads.

It has been argued in the House that former students face crushing debt loads without the recourse to bankruptcy offered to other debtors. It is argued that individuals with student debts are unfairly hampered by the bankruptcy system, forced to live with debt levels that would otherwise qualify for bankruptcy protection.

I suggest that these arguments present only half the picture. It is true that student loans are not easily discharged under the Bankruptcy and Insolvency Act but bankruptcy is a last option, not a first option.

Before condemning the rules and changing them, we must understand the rationale for their creation. The Bankruptcy and Insolvency Act was amended in 1998 after careful consideration by Parliament to stem the increasing option of declaring bankruptcy rather than paying student loans.

In the years leading up to the amendments, losses to the Canadian student loans program due to bankruptcies were becoming unsustainable. For the fiscal year 1995-96 alone the cost of losses due to bankruptcy was more than $100 million. Losses of that magnitude threatened the viability and the continued existence of that program.

A look at the statistics suggest that bankruptcy was being treated as a first option by student loan holders. Many of the bankruptcies were filed shortly after the former student left the school and before any effort was made to repay the loans. Bill C-236 would encourage a return to this sort of behaviour.

The Bankruptcy and Insolvency Act was changed in 1998 to discourage students from taking the plunge into bankruptcy but it does not work in a vacuum. It works in tandem with the Canadian student loans program which is constantly being improved. For example, in the recent budget the government announced plans to improve the debt forgiveness provisions applicable to students who face the most serious hardships, including those who suffer permanent disabilities, while repaying their loans.

The Canada student loans program has evolved to ensure the mechanisms are in place to help individuals in financial distress, including interest free periods and debt forgiveness. Student loan debtors do not have to resort to bankruptcy. They can look to the student loans program and seek relief there.

Bankruptcy is still available for people in need. Individuals with student debt can opt to seek bankruptcy protection and have their non-student loans forgiven. This combined with the interest relief and debt forgiveness provisions of the Canada student loans program is sufficient to allow must students with debt troubles to become financially stable and capable of paying their loans.

If someone suffers from continued hardship and remains unable to pay his or her loans, the Bankruptcy and Insolvency Act allows a person to obtain a discharge on hardship grounds. To obtain such a discharge, the person must have demonstrated good faith in dealing with the loans and that the financial hardship will likely continue over the foreseeable future.

To be certain, obtaining a hardship discharge is not easy but it should not be easily obtained. Student debt holders must not be encouraged to opt for bankruptcy until the option for bankruptcy is the only possible route. They should take advantage of the protective measures offered by the student loan program and attempt to pay their debts.

This is economically responsible behaviour and it is socially responsible behaviour. It is economically responsible because it ensures that those who benefit from the loans make reasonable efforts to pay them back and socially responsible because paying one's debts back is a good thing.

Governments ensure easy access to loans in order to allow people to pursue a goal of education but we must not forget the taxpayers ultimately pay the cost of losses due to bankruptcy. Student loans are funded through tax dollars. Allowing easy access to bankruptcy and making that option more attractive than repaying loans unfairly increases the burden on the taxpayer.

Easier access to bankruptcy, as contemplated by Bill C-236, also poses a threat to future students. We have seen what easier access to bankruptcy did in the past, leading to massive losses to the student loans program and threatening its continued existence. The program is an essential one, designed to benefit Canadians today and in the future. If people are allowed to abuse the system, taking money out of it without any repayment, the system will not likely be sustainable.

Is it fair to allow former students to take the easy way out at the expense of taxpayers? No, it is not. Allowing students to pursue bankruptcy as an option only two years removed from school is an unsound prospect. It does not encourage former students to pay their debts or to use the debt repayment portion of the Canadian student loans program. It does not provide sufficient time to assess whether the individual will be able to capitalize on his or her education and earn a good living, nor does it provide time to accurately assess whether the individual will be able to pay back the money borrowed from the taxpayers.

Education is not free. It is a valuable resource and one that must be worked for and respected. Loans are provided for prospective students with the understanding that they will be repaid. The student loans program provides people with the time to start their post-study lives and build their careers before requiring them to pay the interest or repay their loans. We should encourage people to use these methods rather than opting for bankruptcy.

Change to the Bankruptcy and Insolvency Act should not happen in a vacuum. It should be handled as part of a comprehensive reform that is capable of ensuring continued balance within the statute and its relationship to other statutes. Changing this provision would throw off the balance and create disharmony between it and the Canada student loans program.

The government is currently reviewing the Bankruptcy and Insolvency Act and is preparing legislative reform options. The issue of student loans is being carefully considered and should be handled in the context of a comprehensive reform rather than a stand alone item. The government cannot support Bill C-236.

Bankruptcy and Insolvency ActPrivate Members' Business

April 6th, 2005 / 6 p.m.
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NDP

Brian Masse NDP Windsor West, ON

Mr. Speaker, it is a pleasure to speak today on Bill C-236. The member for Halifax should be commended for once again championing a cause that I think often gets lost in the wilderness, as it has with this government in particular.

This is related to fairness, equity and justice. That is what we are talking about here. We are talking about students being treated differently from other segments of society. The member for Halifax has eloquently pointed that out in her bill.

I want to read the preamble to the bill so that people understand both what we are talking about here and also the modest changes we are looking at, which are so important. The summary of the bill states:

This enactment amends the Bankruptcy and Insolvency Act to reduce, from ten to two years after a bankrupt leaves school, the period of time during which an order of discharge does not release the bankrupt from the reimbursement of his or her student loan.

The member for Halifax essentially summarizes it with the following statement, which is very good. This is what the member said in the chamber:

It is a tragic irony and it is heartbreaking. It is so important for the discrimination that now exists in our insolvency legislation to end as it relates to students. That is what we are talking about today. Others who become bankrupt, whose circumstances beyond their control have driven them into the situation of financial disaster where bankruptcy is an option, are eligible to apply for bankruptcy protection after two years. However, the government has removed that protection from the student population who have indebted themselves because of the inadequacy of the student aid programs in the country and particularly because of the withdrawal of any meaningful support from the federal government. They are in the position where they are not eligible for such bankruptcy protection for 10 years.

What we are talking about here is allowing a fairness to re-emerge that was taken away and stripped from students. It was stripped from them by this government. The government has chosen other options on where to put the money of this country, money that could have gone to education and thus avoided a bill of this nature coming forward.

I would point out that there are 18 other OECD countries that have free post-secondary education and tuition. I do not know whether Canada will eventually get there, but certainly right now we do not have to continue to throw the entire debt for education onto young people, especially in a free market system that makes it difficult for them to actually get sustainable employment to pay off that investment and also start a family, live in dignity and save for their future retirement.

Let me tell members that when I first came here in 2002, after being elected in a byelection, a reporter came to my house and interviewed me about a number of different things. The reporter asked me what I was going to do with all the money I was going to be making. I said that the first thing I would do is pay off my student loan. That is what we did over the next couple of years.

My wife and I are a typical family. We have two children and we were late in our thirties when we paid off our student debt. We delayed having a family because we wanted to feel some type of economic security. We slowly fixed up our house, but at the same time we paid incredibly high interest rates.

It is also important to note that the interest rates this government takes off the backs of students are terribly high and unacceptable. It is predatory behaviour and the government should be ashamed of it. Let us think about the fact that people can get a car loan for zero per cent and furniture loans for zero per cent while this government charges prime plus 5%. It is scandalous.

Here is what happens to those who have invested in their education, those who are trying to pay back their loans responsibly and do not want to go into bankruptcy. The previous speaker touched on a very important point, that is, as educated people they do not want to leave the victory of post-secondary education and obtaining a degree and then have to capitulate to a very humbling and troubling chapter in one's life, that of declaring bankruptcy.

Nobody wants that. Nobody wants that on their credit rating. Nobody wants to go to their family and say that they cannot pay back their loan, that they borrowed money to be successful. They do not want that. People want to be able to reasonably pay back the investment, not only for themselves but for their country and the investment it made in them, so that we can all be successful. This predatory interest rate leads to the bankruptcy issues and puts people into desperate situations. It is unacceptable.

It also hurts our economy. It is great for the banks and great for the government. They make out all right. There is no problem there. But in my hometown, for example, an auto industry town, this debt load delays purchases of new vehicles. The auto workers pay a lot of money in taxes. They put a lot of money into the United Way. They put it into sending their kids back to school. They contribute to the community.

Also, ironically, it is this government that wants to do a voluntary emission standard for the auto industry. One of the most important things we can do right now is get some of the oldest vehicles off the road and the newer ones on the road. That will lower Kyoto emissions. It will do both: create jobs and lower Kyoto emissions.

What does the government do? It hacks away at students because it can. The government continues to treat them as serfs instead of valuing what they have done and helping them contribute into a formula that means success for all of us.

It is unbelievable that a person can get a house loan at a rate that is lower than that for paying back a student loan. Where is the responsibility of the government to take action where it can, with the stroke of a pen? This is unacceptable.

I recently had a meeting at our local college. College students are funded at a level that is different from the level for university students. It was interesting, because the message from the minister of community and social services, a Liberal in Ontario, was that the colleges had better talk to the federal government because it has the surpluses and Ontario has less money. Ontario has a $23 billion deficit in terms of transfer payments. That was Ontario's solution at the time: to send it back here.

What did the federal government do in the last budget? It had almost $5 billion in corporate tax cuts. It was no problem at all to do that. The government found the money. The Prime Minister said during the last election that he would address post-secondary education and that gap. What has he done instead? A vote? No, they are Liberals, they say they are closer to the New Democrats and scared of the Conservatives, but what did he do when he got here? There was another corporate tax cut.

Another corporate tax cut, but what do students get? If a student is deceased, the government will no longer let the collection agencies go after the deceased. It will forgive the debt at that point. If a student is deceased and owes money, he or she will not have to pay back the student loan. Congratulations, I say, what a significant achievement for post-secondary education. I am sure it matches election rhetoric. Promise made and promise broken.

What we are doing to our young population is unacceptable, especially when they need more education than ever before and there is a changing market in front of them. They often have to return to school before they can even pay off the investment on their original education. They are expected to pay for that, not their companies or anybody else, when they have to go back to get those re-qualification credentials for changing standards because of downloading or other governments adding different layers of responsibility for employment through legislation. They have to pay for that.

What ends up happening is that people come out of school later. They have a higher debt load. They marry later. They have kids later. They defer buying a home until later. What will be really critical later on for the young people of today is that they will have less pensionable earnings and savings because they cannot get by as it is.

They are stopped from buying a house earlier. They are stopped from putting money into their retirement savings plans. They are less likely than ever before to find a company to be with for a good portion of their lives and thus have pensions that will be sustainable. It is a real problem. We are deferring all of that until tomorrow. We are putting it on the backs of today's youth because this government cannot make modest changes.

Moving the bill forward in the House of Commons today would deal with the more desperate cases. We could say to young people that they could start their lives over again. Nobody wants to go through the personal humiliation of admitting that they have to start over in what they want to do with their lives and they cannot pay back what has been given to them. They do not want to do that.

That is why I encourage all members of the House to support the bill, because it is the one thing we can do to give young people something to get them back on track. They can be great contributors to Canada, put their education to better use and be more productive citizens for the long haul.

Bankruptcy and Insolvency ActPrivate Members' Business

April 6th, 2005 / 5:45 p.m.
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Chatham-Kent—Essex Ontario

Liberal

Jerry Pickard LiberalParliamentary Secretary to the Minister of Industry

Mr. Speaker, Bill C-236 proposes a substantial change to the existing rules respecting the treatment of student loans in bankruptcy. It is therefore essential that we do a thorough assessment of the proposals that are being made to make a proper determination.

The present rule is that an individual who goes bankrupt cannot have his or her student loan debt discharged unless at least 10 years have passed since he or she was last enrolled. This is in sharp contrast to the rule applicable to the debts which are typically discharged nine months after assessment in bankruptcy has been filed.

The 10-year rule was introduced in 1998 following a period in which losses to the Canada student loans program through personal bankruptcies had risen greatly. Many of these bankruptcies were occurring shortly after the individual left school. This type of behaviour represented a risk to the viability of the Canada student loans program. Indeed for the 1995-96 year alone, the fiscal cost of bankruptcies involving student loans totalled more than $100 million.

Since then the cost of bankruptcies has been reduced dramatically. In 2000-01, the last year where complete data is available, the cost of bankruptcies to the Canada student loans program was only $5.8 million.

While curbing the potential scope of abuses under the bankruptcy system, the government proceeded with vast improvements to the financial assistance to a student under the Canadian opportunities strategy, including improved access to the Canadian studies grant program, the investment of $2.5 billion in Canada millennium scholarships, a tax credit on student loan repayments, extension of interest relief periods, and the introduction of the debt reduction in repayment measure. These measures have been designed to provide students in financial need with viable alternatives to declaring bankruptcy.

Under the interest relief program it is now possible to go five years after leaving school without being required to make a payment on a student loan. During that time the Government of Canada bears the cost of interest on that loan. In 2001-02 over 140,000 Canadians took advantage of these generous provisions at a cost of $77 million.

Moreover, for borrowers who still experience financial difficulties after interest relief measures have been used up, there is then an actual debt reduction mechanism available allowing the borrowers to permanently dispose of over $26,000 in student loan debt.

I would also stress that the government has stayed on top of this issue. It has responded to the concerns regarding these support measures. In the last three years alone the budgets have contained measures to extend relief or to make relief measures more accessible to people experiencing hardships.

While some may argue that students are unfairly singled out, it is clear from these details that the Canada student loans program is quite generous to those legitimately facing financial problems.

We must also respect the fact that student loans are made available based upon a drastically different basis than a consumer loan. There is no examination of credit worthiness of the borrower. No collateral is required. The loans are interest free during the study periods. The schedule of repayment is flexible and accounts for the financial situation of individuals.

With these mechanisms available, there is some question as to the need for further relief through the Bankruptcy and Insolvency Act. It is reasonable to assume that any provisions for discharge of student loans must show coordination between the Bankruptcy and Insolvency Act and the provisions of the Canada student loans program.

Bill C-236 creates unnecessary overlap between the relief provisions of the Canada student loans program and the Bankruptcy and Insolvency Act.

The point is that there are relief measures available short of bankruptcy. Should those not be used as the first step?

Unfortunately, the bill therefore does not reflect existing relief measures, preferring rather to simply dismiss the debt when other options exist. This poses a very real risk to many students who take a few years to truly develop their full earning potential. It is at that point that their ability to pay becomes more certain and a fuller assessment of the appropriate relief can be made. The bill before us would bypass the measures in place to assist borrowers in favour of walking away from the debt entirely.

Bill C-236 would result in substantial financial cost to the government. In addition to loans financed directly, there are risk shared loans which could affect a large number of people as well. These risk shared loans are funded directly by financial institutions with a risk sharing mechanism which brings in government. The change proposed would likely require contractual agreements and additional compensation to those lenders.

This is the effect only at the federal level. Provincial student loans programs are also captured by the present rules so any change would result in any further levelling of costs there.

I am pleased to tell members of the House that in keeping with the ongoing improvements that have been made to this program, we are reviewing the bankruptcy discharge provisions in the existing legislation. This follows on consultations across the country held by Industry Canada with the participation of a wide range of stakeholders, including student representatives, as well as a more recent report on solvency law issues by the Senate Standing Committee on Banking, Trade and Commerce. That report recommended a reduction in the discharge period to five years and perhaps less in cases of hardship.

Building on this input, officials of both Industry Canada and HRSDC are now examining the many comments and the existing provisions to ensure the Bankruptcy and Insolvency Act and the Canada student loans program are properly integrated and reflect a fair and reasonable standard of discharge for student loans.

In conclusion, the government wants to stress that the period of discharge of student loans must properly take into account measures under the Canada student loans program, the relief available, the continued Liberal access to loans and the costs associated with bankruptcies.

On the face of it, Bill C-236 does not do that. As a result, it fails to provide a fair and reasonable alternative to current provisions of the Bankruptcy and Insolvency Act pertaining to student loans. The government cannot support Bill C-236.

Bankruptcy and Insolvency ActPrivate Members' Business

April 6th, 2005 / 5:40 p.m.
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Bloc

Alain Boire Bloc Beauharnois—Salaberry, QC

Mr. Speaker, I am pleased today to rise in this House to speak to the bill to amend the Bankruptcy and Insolvency Act, a bill that is very dear to my heart.

First, I must say that the Bloc Québécois is in favour of Bill C-236. It is thus in favour of reducing from ten to two years the period of time during which a former student cannot be released, through bankruptcy, from the reimbursement of his debts relating to student loans.

This legislative change will specifically assist the least fortunate among former Quebec and Canadian students and will restore a balance between the moral duty to reimburse the state for the loans and the right to be released from their debts through bankruptcy.

The Bloc Québécois considers that the ten year period, which affects only former students, is too long and is thus a discriminatory measure that is uncalled for.

The Bloc Québécois is aware that bankruptcy must not become an easy way for students to be released from their debts. However, it is unfair to deny this relief to former students who are really in need.

It is because of the fiscal imbalance created by the federal government that Quebec and the provinces now have to increase tuition and change the bursary and loans programs. These measures have a direct impact on the level of student debt.

Allowing former students to clear their student debt by declaring bankruptcy does help the least fortunate Quebeckers and Canadians, but does not provide a sustainable funding solution for the post-secondary education system.

The federal government's lack of vision and willingness to significantly increase education transfers is a clear indication of how much it prefers visibility measures such as the millennium scholarships over truly beneficial measures.

Reducing the timeframe in which a former student cannot declare bankruptcy to clear their debt would help reduce the financial pressure on the poorest in our society, people who, upon finishing school, do not find gainful enough employment to pay back their loans.

Although in Quebec—by virtue of a social choice that distinguishes us from the other Canadian provinces—the average student debt is less than in the other provinces, this does not change the fact that some students are burdened by debt they are unable to pay off. The proposed measure would allow students to benefit, with a very reasonable limit, from the same right as other people, and that is to clear their debt by declaring bankruptcy.

The two-year period proposed in Bill C-236 is short enough so as not to hurt lower income former students. There does need to be a certain period where the student must try to make arrangements to fulfill their financial obligations.

I also want to point out that student debt is a major contributing factor to the drop in Quebec's birth rate. Debt overload discourages thousands of Quebec students from starting a family.

The bill has two major flaws. First, it does not include any measure to hold students responsible for fulfilling their financial obligations and using their loans appropriately. Obviously, students are not irresponsible and there is no reason to believe they do not manage their money as well as other individuals.

However, measures to raise student awareness of the use of loans and of repayment terms would have added value to what Bill C-236 proposes.

Second, the bill is not providing any real answers to the underfunding problem of post-secondary education systems. The fiscal imbalance that is continuing to choke Quebec and the provinces is the primary reason why students get into debt. A substantial increase in direct transfers to Quebec and the provinces is the best way to curb student debt and ensure quality education.

Since the 1990s, federal transfers for post-secondary education have dropped dramatically. Even the Canadian Association of University Teachers came to the conclusion that the weakening of the provinces' ability to fund post-secondary education is primarily due to the reduction in federal transfer payments.

When the member for LaSalle—Émard became Minister of Finance, Ottawa paid 1.7¢ on every dollar of revenue into the transfers for education and social services. When he left his position, nine years later, Ottawa was paying only 1¢ on every dollar of revenue. This represents a 40% decrease.

The federal contribution to total expenditures in education and social programs is now less than 12%.

The Bloc Québécois wants the issue of fiscal imbalance resolved, which would mean a substantial increase in funding available to post-secondary education.

In keeping with the consensus of the provincial premiers, the Bloc Québécois wants federal funding to be 25% of the total expenditure on education and health care by 2009-2010.

Currently, the Quebec system of education is short of resources as the result of cuts in transfer payments, a lack of funding, a shortage of teachers and so, despite the monumental efforts of the Government of Quebec with the meagre resources at its disposal.

The Fédération étudiante universitaire du Québec, the FEUQ, and the Canadian Federation of Students are also critical of the federal government's refusal to increase transfer payments for post-secondary education by $4 billion to offset the cuts during the 1990s. This money would have allowed Quebec to expand its manoeuvring room in order to reinvest in universities, and the rest of Canada to reduce tuition.

In closing, I want to reiterate the Bloc Québécois's support for this bill so students can start their working life in a respectable fashion, and I invite the other parties to support it.

Bankruptcy and Insolvency ActPrivate Members' Business

April 6th, 2005 / 5:30 p.m.
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NDP

Nathan Cullen NDP Skeena—Bulkley Valley, BC

Mr. Speaker, it is a pleasure to rise on behalf of my colleague and the NDP with respect to this important bill on students loans and bankruptcy, Bill C-236.

Specifically, I would like to start with a few shocking numbers. In the House we have heard a number of times the current government of the day talk about how well it has done on behalf of students, particularly post-secondary students. The reality in terms of the numbers is otherwise.

Since the Liberals took power, we have watched $4 billion cut out of core funding for post-secondary institutions and the average increase in student debt over that period rise by 110%. The average debt for students leaving with bachelor degrees is now at $25,000. For students obtaining more than bachelor degrees, it is close to $100,000.

These numbers tell me there is a situation of dire need for university students leaving and entering post-secondary institutions. I use this strong language of dire need because these people often represent the greatest hope for our country in terms of their ability and capacity to formulate part of our economy, the investment the country needs to make consistently for Canada to become the world leader, as the government would pretend us to be.

When it comes to post-secondary institution funding, the numbers speak for themselves. Taking $4 billion out of core funding over the period the Liberals have been in office and then calling it a success story is an absolute embarrassment. It is a shame that the bill is even necessary.

The Liberals have now introduced legislation that suggests the way students can get out of bankruptcy is if they die. It is most commendable on their part, but they should not be congratulated at all for their cynicism and approach in dealing with student debt and poverty.

They refuse to invest in education. The numbers will roll out and the Liberals will talk about how wonderful they have been contrary to the real and anecdotal evidence we see by the number of students leaving university or being barred from them. It is representative of a lack of courage on behalf of the government to tie any investments they have made in post-secondary institutions. The money is passed to the provinces and in some cases they have been able to defer their contributions, leaving universities in the same dire strait. That has caused tuitions to go up.

When the NDP government in British Columbia left office, the Liberal government that took over immediately lifted the freeze on university tuitions. This caused tuition fees to escalate and put them beyond the reach of many ordinary Canadians and their families.

We want to be leaders in the world and we use that language often in the House. Yet by not investing soundly in post-secondary education, it leaves us behind the rest of the world, a world which knows that advanced technology and education will be the coming economies.

I look at the numbers presented to me in terms of the debt load of students who are leaving university. These moneys go to our financial institutions, primarily the large banks, rather than go to where the economy needs that investment. The banks have been reporting record profit quarter after quarter. They are doing exceptionally well.

I am not sure a lot of tears need to be shed for the banking institutions. They have done well and no one should condemn them too much, given what they have produced in economic joys for their shareholders. With regard to investing, the question becomes this. Is the money better placed in the private banks and taken out of the hands of students so when they leave post-secondary education, they are required to pay these loans, which students are exceptional at doing?

When we compare it to the corporate sector's ability to pay back and not default on loans, students have been consistently reported as good risks, if we can use that term. These students are no longer able to invest, put a down payment on a home, or purchase a car, when they are leaving their student life with a crippling debt. In the past 13 years the average student debt has gone up by $1,000 per year, every year.

Certainly, if such a similar increase and rapid expansion in debt were placed on our business community, the cries would be loud and far-flung across the House, but because it is students, there seems to be some notion that we can tolerate something like a 110% increase in tuition fees during the life of a government.

I went to college, as many members of the House did. I had an excellent experience which afforded me better opportunities to seek good, sound, and well paid employment, yet I left with a burden of student debt that inhibited my ability to contribute more to the economy. It held me off for a number of years before I could start up my own private business and take an incurred debt and risk that is needed for just about every business venture.

Many people ask why we should change the Bankruptcy Act when most Canadians, particularly most students, that enter into a loan arrangement with a bank have all the intention of paying that loan back in good faith. Students will often do whatever they can by just about any means necessary to pay these back. We need, in this House, to dispel the myths that students are bad investments or that they are at great risk of defaulting on loans when the numbers are absolutely showing the opposite.

We need to recognize the contribution that universities make across this country to their local communities and that those students make to the local communities as well. We must truly see them in terms of an investment, no different than the investments that we consistently find room to make in terms of the auto sector, large industries, or border security. All of these investments that we seem to come to the conclusion are sound investments for the prosperity of this country, yet, the government continues to dither on promise after promise made to the people of Windsor to improve their border situation.

It seems to me that the government and the Prime Minister, and the former finance minister, understand the principle of investment. The Prime Minister understands that lowering the costs for business that he previously ran by moving it offshore was a sound and wise move for the profitability of his business.

Yet. when we talk about the investment needed for students in this country, the House stalls and stutters, and pretends to pat itself on the back for issuing such ideas as small investment in students that may be born today that will achieve a $5,000 perhaps $7,000 grant available to them 18 years from now. At the current rate of increase in tuition, putting it out of the hands of most ordinary Canadians, what will that look like 15 or 20 years from now? What will the proposal that the Liberals have brought forward actually do for students? I hesitate to think that it may get them through their first semester, if that.

In 1998 the Liberals changed the act to say that Canadians cannot receive bankruptcy protection for student loans until 10 years after they complete their studies. This is unfair. This special treatment of students is the absolute opposite of the message that this government should be sending to our young people. Our message should be that we trust them, that we believe in them, and that we are willing to invest in them. Surplus after surplus has shown up for the Liberal Party because of its miscalculations on the budget. The Liberals are exceptionally skilled at missing the mark over and over again, regardless of how many economists they bring on board.

However, in all of these surpluses and particularly this surplus year, the Canadian Federation of Students, and other advocacy groups for students, found the budget not only wanting and lacking but an absolute failure when it came to investing in students. Even in the face of a huge surplus beyond everyone's expectations and combined with all the rhetoric that we heard during the last election, and consistently in the House about the need to support students, there is still a continued cynical lack of support for students by the government.

I appreciate this bill. It is a strong bill. We look for the bill to be supported throughout the House.

Bankruptcy and Insolvency ActPrivate Members' Business

February 25th, 2005 / 1:40 p.m.
See context

Liberal

Lui Temelkovski Liberal Oak Ridges—Markham, ON

Mr. Speaker, I appreciate the opportunity to speak about why we need to preserve the integrity of the Canada student loans program and ensure access to higher education in Canada by voting against Bill C-236.

In the Speech from the Throne the Government of Canada pledged to build a Canada where the creativity and talents of all Canadians are maximized. The role of government is to give Canadians the tools and opportunities they need to make the most of their lives. We understand that investing in the skills of our citizens is simply one of the best investments we can make as a nation.

By 2007, 70% of the new jobs in Canada will need some form of post-secondary education, whether it is a trade, a college diploma or degree, but as many as 42% of working age Canadians lack the necessary literacy and other essential skills to meet these requirements. Recognizing the urgency of the situation, the Government of Canada has made skills development and learning a priority.

Certainly part of the answer lies in opening up access to post-secondary education. Among OECD countries Canada has the highest rate of participation in post-secondary education. Canada has one of the most effective student financial assistance programs in the world.

Through the Canada student loans program we are doing much to help students cope with the rising cost of post-secondary education. Over the last 40 years the Canada student loans program has earned respect across the country by helping countless students meet the cost of post-secondary education. About 330,000 Canadian students a year currently benefit from this program, which last year lent $1.6 million to students in need.

We recognize that more must be done to improve access to education. More must be done to help students cope with the rising costs and high debt load upon graduation. That is why we have made improvements to the Canada student loans program.

Members may recall that the 10 year prohibition on discharging student loans was introduced in 1998 as a means of improving the integrity and accountability of our student loans program in Canada. By increasing the prohibition on discharging loans to 10 years and introducing improved measures to assist students in financial difficulty, we were able to significantly reduce the number of students declaring bankruptcy in Canada.

If a student goes bankrupt, the student loan stays on the books for 10 years, allowing the student time to settle down, find a job and begin making payments. The Government of Canada recognizes that it is wrong to penalize students with bankruptcy and a bad credit rating right after completing their studies when their potential for earning has yet to be realized.

Over the years the Government of Canada has made significant improvements to the Canada student loans program. New debt relief measures were introduced to help students manage their debt and avoid declaring bankruptcy. These include interest relief and debt reduction in repayment. Interest relief is a debt management measure which provides students who are experiencing temporary financial difficulty in repaying their student loans with up to 54 months of relief on loan repayments. While students are on interest relief, they are not required to make any payments of either the principal or interest on their loans. During that time the Government of Canada pays the monthly interest on the loan.

Debt reduction in repayment is a targeted debt management measure. It is available to help students who have exhausted interest relief, but continue to remain in financial difficulty.

Debt reduction in repayment reduces the student's loan principal by up to $10,000 and aims to lower the monthly loan payment to an affordable level relative to his or her income. In the event that a student continues to remain in financial difficulty following this reduction, he or she may be eligible for two additional reductions of up to $5,000 each in 12 month intervals.

In implementing debt management measures, our goal was to encourage more student borrowers to make use of them as an alternative to declaring bankruptcy and creating bad credit histories.

These programs have been a tremendous success. They have helped many Canadian students avoid declaring bankruptcy and get back on their feet again.

Since their introduction in 1998, more student borrowers are taking advantage of these debt management measures. In fact, in 2001-02 over 140,000 student borrowers accessed the interest relief program at a cost of $77 million.

In the 2003 federal budget we introduced new measures to allow borrowers who declared bankruptcy to be eligible for new loans, interest relief and debt reduction in repayment. These new amendments came into effect last May. This change has helped literally hundreds of Canadian students complete their studies.

New changes to debt management measures were introduced in the last federal budget. They include measures to increase the income threshold used to determine eligibility for interest relief by 5%, and to increase the total amount of debt reduction in repayment from $20,000 to $26,000.

Bill C-236 asks Parliament to revert to the two year rule used before 1998. We know from experience that the two year rule simply does not work. It does not give Canadian students the time they need to become established, find well paying jobs and begin making payments on their loans.

Before changes were made to the bankruptcy rules, more than 53,000 students declared bankruptcy between 1990 and 1997 at a staggering cost of $445 million to the government in unpaid student loans.

By extending the period to 10 years, the Government of Canada has been successful in helping to curb the number of bankruptcies of recent student borrowers. Only 5,945 student borrowers declared bankruptcy between 1998 and 2000. During that same period approximately 230,000 borrowers received interest relief and over 900 borrowers benefited from debt reduction in repayment.

As a matter of fact, high bankruptcy rates between 1990 and 1996 were the catalyst for the government's decision to introduce new measures to lower student bankruptcies, such as the 10 year rule.

Allowing students time to make their way in the world after graduating is the right thing to do. That is why I am urging members to vote against Bill C-236.

Bankruptcy and Insolvency ActPrivate Members' Business

February 25th, 2005 / 1:25 p.m.
See context

Bloc

Yves Lessard Bloc Chambly—Borduas, QC

Mr. Speaker, first, I would like to indicate that I am replacing my colleague from Beauharnois—Salaberry, who is unable to be in the House today because of the textile issue in Huntingdon.

First, I would like to congratulate the hon. member for Halifax for her bill and the quality and relevance of her remarks. What stands out in her speech is the position that this is a matter of equity and fairness for students, as opposed to people in other groups in our society that are forced to go bankrupt. Bankruptcy is not something you choose, but something you are forced into. This is particularly tragic for students because it happens when they have not had the time yet to enter the labour market or find a job that would give them enough money to meet their financial obligations.

I want to say at the onset that the Bloc Québécois agrees with Bill C-236. We are in favour of reducing from ten to two years the period of time during which a former student cannot be released from the reimbursement of his or her student loan.

Naturally, this measure will lighten the load for less fortunate students. This is also a good measure to ensure that students repay their loans not only for extremely moral reasons or incentives, but also because of a legislative obligation.

If I am not mistaken, only students face such a long period before they can be free of their debts. Anyone else in society who goes bankrupt can ask to be discharged long before.

The Bloc Québécois is well aware of the fact that declaring bankruptcy must not be an easy way out. There must be a moral obligation and a legal obligation, in reasonable proportion to everyone else in society faced with declaring bankruptcy.

The issue is that, overall, bankruptcy by students will have to be taken into consideration in light of the fiscal imbalance, among other things. We are well aware that constraints on the provinces resulting from the fiscal imbalance are creating obligations for the provinces. In turn, the provinces will have to limit their loans and even bursaries, thereby adding to the financial difficulties faced by students.

We know that, over the past few years, particularly since 1990, the federal government has gradually cut transfer payments to the provinces for education, which has—as I said earlier—added to the difficulties faced by students. Our interest in this bill is that we must call on the other parties in the House to consider this problem in a more global context, particularly in relation to the fiscal imbalance.

At the same time, it points up the Liberal government's lack of leadership in the overall administration of education, to name just one example. The federal government is insensitive not only to the difficulties of the provinces as a result of cuts to transfer payments, given their obligations in education, but also to the difficulties students face as a result.

That is the end of my introduction, now for a brief historical overview of the situation.

In 1949, the first legislation was enacted, and this made the federal government a preferred creditor in the event of a student bankruptcy. It was therefore the first one to be paid off, and so the student could not escape his indebtedness to the federal government.

In 1992, that measure was attenuated to include only a student's first bankruptcy. In 1997, this same government added a two-year deadline. Less than a year later, to the surprise of everyone—and to this day we do not know the reason behind it—before that two-year period could even have a proper trial, they extended the period by another two years. Totally incomprehensible, that.

So, without any trial period, students found themselves faced with a discriminatory measure compared to others in society who declare bankruptcy, unable to be free of their debts for ten years.

It seems to us that it is time now for this situation to be remedied. The measure proposed by the hon. member for Halifax in Bill C-236 will enable us to correct that injustice and establish fair treatment for students.

I would not want to talk about this bill without looking at both its positive and negative aspects. In the Bloc we think the negative aspects also have to be looked at in order to make a fair judgment and see whether there is any need for amendments.

First of all, let us look at the positive aspects. Obviously there is the idea of relieving financial pressure on the most disadvantaged, in particular, and correcting the unfairness I was speaking of earlier, especially with regard to people who have trouble finding a job because, of course, these people are the ones with the most problems.

In addition, this way of doing things does not unduly liberate the individual by applying the two-year rule. A degree of responsibility is thus maintained. I will come back to that, because we think this responsibility seems rather limited.

I am coming to the disadvantages. Perhaps the hon. member for Halifax has already considered them. Perhaps she already has some answers. For our part, we are trying to find a way that students would feel a little more responsible in that time period. The length of time seems about right. Still, we often talk about moral responsibility, but how can we see it in this bill and say that it will not only be felt but also assumed and put into practice?

I will conclude the last part of my remarks with a few words about the federal government's withdrawal. Since 1990, the federal government has been gradually backing out of transferring funding to the provinces for education, which created a fiscal imbalance. This is one central aspect of the debate as we consider the budget.

This withdrawal represents a 40% shortfall in transfers to the provinces for education. This means that, from 1994 to 1998, an amount of $6.2 billion was not transferred to Quebec for health and education. That is a huge amount. This situation was never corrected. It still exists and its impact can still be felt. It is reflected in almost every area of society, including this issue. That is why we believe it should be considered from the angle of the fiscal imbalance.

Bankruptcy and Insolvency ActPrivate Members' Business

February 25th, 2005 / 1 p.m.
See context

NDP

Alexa McDonough NDP Halifax, NS

moved that Bill C-236, an act to amend the Bankruptcy and Insolvency Act (student loan), be read the second time and referred to a committee.

Mr. Speaker, in my capacity as the New Democratic Party advocate and critic for post-secondary education I rise to launch second reading of my private member's bill, Bill C-236, with very mixed feelings. I will try to explain that in the time available to me.

This is a measure that is desperately needed to provide some relief to students who are in dire straits. The reason I rise with mixed feelings is that it was my hope and the hope of hundreds of thousands of students and their families that the need for such legislation, this debt relief for students, would not be so great today after the budget was tabled in the House this week.

Sadly, nothing could be further from the truth. What the students of yesterday, today and tomorrow have received from the budget is the back of the hand and a kick in the teeth with respect to the priority needs for young people and for all Canadians who understand the value, the importance and necessity in today's world of being able to afford a post-secondary education.

I want to briefly outline what the bill would do. The summary states:

This enactment amends the Bankruptcy and Insolvency Act to reduce, from ten to two years after a bankrupt leaves school, the period of time during which an order of discharge does not release the bankrupt from the reimbursement of his or her student loan.

I have no doubt that some people who are trying to follow this debate are asking themselves why on earth the NDP member from Halifax would be introducing a bill to deal with bankruptcy. I am also sure they will be asking themselves whether there not other more urgent priorities for students and greater needs that ought to be addressed by the federal government and raised by all members of Parliament.

The answer to those questions is an unqualified yes. A lot of things are of higher priority to the overwhelming majority, especially to all post-secondary education students today and those who will follow, but the sad truth is that students have been virtually abandoned by the budget that was brought in here this week in terms of those priority needs.

It is absolutely clear that yesterday's students and their struggling families needed a meaningful program of debt relief, debt forgiveness in many instances.

Second, today's students, because of the crippling debt loads that are amassing and the continuing spiraling of tuition fees, desperately needed the government to reinvest in post-secondary education to make it possible for universities to both freeze and lower tuition fees. However, not only has the government not addressed this urgent matter, it has once again broken an election promise in this regard.

We are not just talking about some casual election commitment. We are talking about a specific commitment that the Prime Minister made in a grubbing for youth vote exercise in which he participated, the great Canadian job competition, a debate that was held with my leader, the member for Toronto Centre—Rosedale. At that time the Prime Minster said that the government recognized that there had been massive cuts over the last decade that have caused the financial crisis for students and he committed to the reinvestment of $8 billion to $9 billion in core funding for post-secondary education. There was absolute silence in the budget on that matter.

Tomorrow's students need to know there will be a post-secondary education system still standing when the government is through hacking and slashing at it. We have damage done, not just to the finances of students and their families in terms of debt burden, but we have an erosion of the post-secondary infrastructure because of the massive unilateral cuts that were introduced in that infamous 1995 budget. After one takes into account the paltry dollars that were contained in this week's 2005 budget, today the level of core funding to our post-secondary education system is below the level of core funding in 1993 when the government came to office some 12 years ago. It is unbelievable.

It is a tragic irony and it is heartbreaking. It is so important for the discrimination that now exists in our insolvency legislation to end as it relates to students. That is what we are talking about today. Others who become bankrupt, whose circumstances beyond their control have driven them into the situation of financial disaster where bankruptcy is an option, are eligible to apply for bankruptcy protection after two years. However, the government has removed that protection from the student population who have indebted themselves because of the inadequacy of the student aid programs in the country and particularly because of the withdrawal of any meaningful support from the federal government. They are in the position where they are not eligible for such bankruptcy protection for 10 years.

This is out and out discrimination against a category of Canadians that needs to be fought in the courts. I applaud the student leaders of the country, through the Canadian Federation of Students, who are fighting this discriminatory provision through the courts. It is pathetic that our students have to do this to get the government to pay attention to their desperate lot.

It is unbelievable the one measure, which we could hardly even call it an initiative let alone a major initiative, contained in the budget for which the government keeps congratulating itself is if students die or become permanently disabled, then they will have the debt forgiveness for their student loan.

I applaud the government for its effort. In fact I had a private member's bill to propose exactly that. I am glad that my other private member's bill to provide for such relief is no longer needed. I say that without qualification. However, it is such a tiny measure in relation to what is needed.

Since I have become the post-secondary education critic, I have received an avalanche of letters, e-mails, phone calls, personal approaches from students whose lives are in ruin because of the inadequacies of our student aid system. The government has pushed money over into a foundation to escape accountability. It has absolutely turned its back on the universally recognized need for a student aid system that is based on needs. That has left incredible numbers of students in desperate financial straits.

I could share with my colleagues today the kinds of problems students are having in no more effective way than to briefly quote from the letter from just one such student. I had introduced the bill before I ever heard from this student in my riding. I will not have time to read it in full today because it is quite lengthy. He says:

For years I have been a slave to the student debt I was forced to incur in order to receive a post-secondary education. With no funding available from my family and only minimum wage earnings saved by myself I embarked on my higher education with five years of student loans, leaving me approximately $40,000 in debt upon completion of my studies...

He goes on to describe the nightmare of trying to deal with the student aid system and the frustrations in all of that. He then goes on to say:

My intention at 18 years old, when I accepted my first student loan, was never to have to declare bankruptcy with the debt I was assuming. But the reality of it ends up being so. After speaking to many different sources over the past couple of years, ranging from financial advisors, bankruptcy counsellors, legal aid lawyers, and going through my situation in great length, I was told by the majority of them that bankruptcy is my best option.

Because this student and every other student in a similar situation in the country is actively discriminated against by the insolvency provisions, I have introduced my private member's bill to amend and to correct the Bankruptcy and Insolvency Act so students will be given fair and equal treatment.

He goes on to say:

More than anything, I want and need the stresses of this to be eliminated from my life so I simply can get on with it and create a decent living for myself.

He finishes with the following:

I am one of thousands who desperately need this change to occur. We, as young Canadians, need to get on with our lives and become productive members of society so that we may create lives for ourselves that will enable future generations to succeed. I feel as though the Liberal government has put young Canadians in a position that prevents us from doing so, preventing us from moving forward with a proper life's path.

This is the problem we have created for a lot of our students today. However, the problem does not only exist for students. In many cases the very low income families, who could not afford to help them with their escalating tuition fees in the first place, are now stuck trying to help bail them out of situation out of which they simply cannot get.

I to appeal to every member of the House to understand that this is a small measure. This is a measure to which every other Canadian is entitled, yet we are insist on dragging down our students with student debt, through no fault of their own. The government has effectively abandoned any meaningful system of student aid.

We have to address the crisis and emergency that exists with respect to the bankruptcy provisions while we continue to press the government to reinvest, starting with the Prime Minister's very specific commitment during the spring election to restore $8 billion to $9 billion of core funding to the post-secondary education system. We can do no less if we mean what we say about our youth being our future.

Canada Education Savings ActGovernment Orders

December 3rd, 2004 / 1:15 p.m.
See context

NDP

David Christopherson NDP Hamilton Centre, ON

Mr. Speaker, I appreciate the opportunity to focus on that. It has been the subject of some serious discussion and debate within our caucus. In fact our colleague from Halifax has sponsored Bill C-236 which is meant to change that very issue and move it from 10 years to two years so students have some opportunity to have a sound footing for a future.

It makes no sense to go through the whole process of doing everything we can collectively to provide accessibility and professionalism in a post-secondary education system if students who come out of that system in their early twenties feel their financial life is over before it has even begun.

We see this as an important critical component. We hope colleagues would look at Bill C-236 in that light. Hopefully, if not the Prime Minister, his representative would acknowledge that they made a mistake when they made that change. Now in this minority government, we have a unique opportunity, through the bill of the hon. member for Halifax, to correct that mistake. That represents another positive step forward as opposed to the sort of pretend step that Bill C-5 is taking.

Bankruptcy and Insolvency ActRoutine Proceedings

October 20th, 2004 / 3:25 p.m.
See context

NDP

Alexa McDonough NDP Halifax, NS

moved for leave to introduce Bill C-236, an act to amend the Bankruptcy and Insolvency Act (student loan).

Mr. Speaker, I have the privilege of introducing this bill which is designed to undo the damage from the 1998 bogus education budget introduced by the government. The current legislation openly discriminates against students by restricting their ability to declare bankruptcy when they are driven to financial ruin by their student debt burden and inadequate post-secondary education funding.

It had been hoped that the government would remedy this injustice in the throne speech, or indicate its intention to do so. It was silent on the matter. I therefore introduce this bill to try to remedy that problem.

(Motions deemed adopted, bill read the first time and printed)