The federal government has recently announced changes to the Bankruptcy and Insolvency Act. The new provisions will allow university students to claim bankruptcy status seven years after graduation, instead of the current ten. The change was announced by Minister of Industry David Emerson and Minister of Labour and Housing Joe Fontana in early June as part of Bill C-55.

The reaction of student groups to the change was one of muted optimism. They are appreciative of the change, but see it as a merely interim solution to the larger problem of student financial need.

“This legislation is a step in the right direction, but it is still fundamentally discriminatory,” Students Administrative Council President Paul Bretscher said. “Only two groups in Canadian society are discriminated against in bankruptcy legislation: criminals and students. Nobody has explained why students should be treated in this manner.

“The federal government is sending mixed messages about its policy on post-secondary education. On the one hand, Bill C-48 provides a big boost in funding while this change does nothing to change the country’s discriminatory laws,” Bretscher commented. (Bill C-48, the NDP’s amendment to the federal budget, includes $4.6 billion for social programs, including education.)

Joel Duff, a representative of the Ontario branch of the Canadian Federation of Students, was even more critical. “While this is good change, it does not address the basic financial problem that university tuition dramatically increased in the 1990s,” Duff commented.

Duff also sought to counter what he considered a misconception about student responsibility. “Only 8 per cent of students who take loans default-and once they missed a payment, many go on to fully pay the debt,” he said. The CFS has launched a constitutional challenge to the Bankruptcy provisions arguing that its provisions discriminate on the basis of youth, which constitute the majority of post-secondary students. The CFS has waited over a year to hear a judgment on the case.

Joseph Allen, a bureaucrat at Industry Canada, explained the rationale behind the changes. He said that amendments were being implemented mainly as the result of a Senate investigation of the issue, though there have been informal consultations with interested student groups as well.

C-55 received its first reading in early June and is unlikely to make its way through parliament before 2006, as the House of Commons is scheduled to rise for its summer break this week.

In 1998, the Bankruptcy and Insolvency Act was changed to institute a ten-year waiting period before graduates could declare bankruptcy.