Senator challenges bankruptcy law to ease student debt

By Natasua Marar

Tue Lance (University oF
Winpsor)

WINDSOR (CUP) -- Quebec Senator Yoine
Goldstein reintroduced Bill S-205 last Octo-
ber, hoping to ease the burden of graduates
who can’t pay back their student loans.

Post-secondary groups from across the
country have since lent their support to the
bill, which was discussed in Parliament on
April 3.

The Bill would amend the Bankruptcy and
Insolvency Act to allow post-secondary stu-
_ dents to apply for bankruptcy within only two
yéars of finishing school. Currently, students
must wait seven years before filing for bank-
ruptcy.

“At one extreme, a former student who can
really afford to pay back the loan over time
and without too much difficulty should be
compelled to do so,” Goldstein said.

“At the other extreme, a former student
who has no short- or medium-term prospect
to be able to reimburse any part of the loan
should not be compelled to remain in limbo,
being unable to pay and also unable to make
a fresh si

The Canadian Federation of Students, Can-
ada’s largest student lobby group, has long
advocated for the elimination of the wait
time before a student can declare bankruptcy.
Tan Boyko, government relations coordinator
for CFS, is one of many student supporters
of Bill S-205.

“The Canadian Federation of Students’
(CFS)] position is that there shouldn’t be
any [delay]...
seven to two years is a step in the right direc-
tion,” he said.

The Bill will also allow former students
with long-term financial constraints resulting
from their loans to apply for a court order,
which would relieve them from all or part of
their debt.

If the court decides not to fully eliminate
the debt, they could still opt to make pay-
ments more reflective of their financial situa-
tion.

According to the 2006 Canadian Under-
graduate Survey Consortium (CUSC), 55 per
cent of graduating students owe an average
of $24,047 in loans.

The survey also indicated that undergradu-
ate students with more debt are less likely to
pursue graduate studies.

Bill S-205 has received support from The
Canadian Federation of Students (CFS), The
Coalition for Student Loan Fairness (CSLF),
The Canadian Alliance of Student Associa-
tions (CASA) and Fédération Etudiante Uni-
versitaire du Québec (FEUQ).

“The Bill has received general support
from student associations and from a number
of Liberal Senators. It is opposed by the De-
partment of Finance and by the Conservative
Party Critic in the Senate, on behalf of the
Government,” Goldstein said.

“Tt’s a great bill, and Senator Goldstein is
one of the foremost experts in Canada on
bankruptcy so I think it will hold consider-
able weight,” Boyko said.

Both Goldstein and Boyko warn, however,
that filing for bankruptcy under the Bill’s pro-
visions does carry risks, and should only be
used by students in the most dire situations.

Declaring bankruptcy affects an individ- |

ual’s credit for several years and makes it im-
possible to obtain credit cards, lines of credit

but reducing the [delay] from f

and mortgages.

“The whole Bankruptcy [and Insolvency]
Act is designed to provide last refuge for
those who have no last option,” said Boyko.
“This is not an instrument that will be used for
widespread debt relief.”

“Going into bankruptcy always affects a
person’s credit record and this is the reality
that a former student loan debtor will have to
face if he or she goes into bankruptcy,” said
Goldstein.

“Repayment of a student loan is a legal
obligation. Only in exceptional circumstances
should that obligation be reduced or eliminat-
ed. Those circumstances are best determined
by judges and not by universities,” explained
Goldstein.

Goldstein does, however, believe that uni-

1

versities need to educate students on how to
manage debt.

“Universities and all other educational insti-
tutions should be teaching numeracy. and re-
sponsible incurring and discharging of debt.”

Although the CFS is advocating for Bill S-
205, it believes that student debt should be
discouraged in the first place.

“What our organization is calling for in On-
tario is immediate reduction in tuition fees,
which will reduce the need to borrow [money].
An up front grant is the most effective way of
reducing student debt,” said Boyko.

Goldstein disagrees with that point. .

“Student debt cannot, and should not, be
‘prevented.’ In appropriate circumstances,
students have to borrow in order to be able
to pursue their post-secondary education,” he

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said.

“However, all stakeholders have a role to
play in teaching the proper use, handling and
discharge of debt and that role should more
properly be played by educational institutions
as an educational function rather than lending
institutions which necessarily have a particu-
lar point of view,” Goldstein concluded.

Boyko thinks that Ontario universities are
“grossly irresponsible” because they are using
tax payer’s dollars to lobby the government to
increase and deregulate student fees.

“The most efficient and fair way to deal
with student debt is to deal with everything
possible to make sure it doesn’t increase in
the first place,” he said.

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