The Supreme Court of Canada has clarified the conditions under which individuals can be released from student loan debt under the federal bankruptcy law. The court ruled that a person must wait seven years after completely finishing their postsecondary studies before qualifying for such relief. This decision was announced on April 17, in the case of a woman who had received government student loans while pursuing three university programs from 1987 to 2003.
The woman in question later returned to academia to earn a master’s degree in 2009, doing so without additional student loans. In 2013, she opted to make a consumer proposal under the Bankruptcy and Insolvency Act, which serves as an alternative to bankruptcy and allows for the repayment of a portion of the owed amount or payment over a longer timeframe. According to the bankruptcy law, individuals may be discharged from their student loan debt seven years after they cease to be enrolled as full- or part-time students.
In 2019, the woman argued that she should be considered a non-student for the purposes of the law as of 2003, the year she completed her last period of study funded by government student loans. However, this argument did not succeed.
Impact on Daily Life
This ruling by the Supreme Court of Canada has significant implications for former students facing financial difficulties. It underscores the importance of understanding the timeline for debt relief eligibility, particularly for those who have returned to education after an initial period of study. Individuals with student loans need to be aware that the countdown for debt discharge begins only after they have ceased all full- or part-time studies, which may affect financial planning and decisions regarding further education.
For the broader community, the decision serves as a reminder of the complexities involved in managing education loans and how these impact financial health. As costs of higher education continue to rise, this ruling may prompt prospective students to carefully consider their funding strategies and the long-term financial commitments associated with taking out student loans.
