Current Case Status - Updated July 4, 2005
Our challenge was heard in Ontario Superior court on June 16, 2004 before the Honorable Justice Gordon Sedgwick. On June 30, 2005 Justice Sedgwick issued his ruling. Regrettably, Justice Sedgwick upheld the law on the basis that student loan borrowers do not constitute a separate social group and therefore are not protected by Section 15.

Read the Canadian Federation of Students' public statement (.pdf).

View answers to the most frequently asked questions.

The federal government’s legal defense of the law mirrored their public policy response in that they argued that the law was justified on the grounds of the programs that the government provides. The primary programs to which they refer are Interest Relief, Debt Reduction in Repayment, and the Millennium Scholarship Foundation. The Federation has argued that the government’s position ignores the fact that those in default (that is, those who can’t pay their loans) are ineligible for most relief programs described above. Moreover, two of the three programs offered as a defense of the prohibition, the Millennium Foundation and Debt Reduction, are widely recognised as policy failures.

Background
In 1997, under the auspices of Industry Canada, the federal government undertook a review of the Bankruptcy and Insolvency Act (BIA). During that review process, the federal government proposed that provincial and federal student loans be exempt from protection under the Act for a period of two years. At the time, a series of hearings were held and a wide variety of organizations, including the Canadian Federation of Students, appeared before Industry Canada committees to argue against the idea. Despite these consultations the BIA was amended to deny student loan borrowers the right to declare bankruptcy for a period of two years.

Less than ten months after this initial change, the federal government amended the Act again and extended the prohibition on bankruptcy for student loans to a period of ten years. This change was buried in the legislation contained in the government's "Education Budget" of 1998. No public hearings were held on the change and the federal government has never supplied any data justifying the change from two to ten years. In addition, the change was buried in omnibus legislation and was never debated in the House of Commons. In fact, when the Canadian Federation of Students began lobbying Liberal Members of Parliament in response to these changes, many did not know that they had voted for the legislation.

Shortly after the extension to a ten-year prohibition, the Canadian Federation of Students began to investigate the possibility of challenging the law under the Canadian Charter of Rights and Freedoms. After consulting with legal counsel, the Federation began the process of mounting a Charter challenge to the law. After finding an individual willing to go forward as a "test case", official notice was served in March 1999. At that time, research and other preparations were undertaken for a full-scale challenge of the law's constitutionality.

On December 6, 2000, the Federation filed affidavits with the Ontario Superior Court of Justice and supporting materials outlining our case against the Act. In late February, the federal government filed its response material. In its response the federal government deposed a single affiant, an employee of Human Resources Development Canada. The federal government's affidavit offers no substantive response to the Federation's constitutional arguments against the law. Rather, the federal government outlines policy measures undertaken since 1998 such as interest relief and debt management. In lieu of a defense of the law itself, the federal government appears to be arguing that modest policy initiatives cancel out the right of student loan borrowers to avail themselves of the protection afforded by the bankruptcy law.

On November 4, 2003, the Senate Committee on Banking, Trade, and Commerce released its report on the Bankruptcy and Insolvency Act. The Report called for the reduction of the student loan bankruptcy prohibition from ten years to five years. The Committee's report was made available to all Senators and Members of Parliament, but because it was a special report, it does not require action from the Senate. However, since there was no parallel report produced by a House of Commons Standing Committee, this report should weigh heavily in the minds of the policy makers within Industry Canada.

Click Here to download the Senate Committee Report.

The charter challenge brought by the Canadian Federation of Students was heard in Ontario Superior Court on June 16. The Federation argued that the law prohibiting students from declaring bankruptcy on student loans for ten years after graduation violates Section 15 of the Charter of Rights and Freedoms.

Private Member's Bill C-236
On October 20, 2004, New Democrat MP Alexa McDonough (Halifax) introduced private member's bill C-236 (read the text of the bill here). The bill proposed to reduce the prohibition on Canada Student Loans from ten to two years.

The bill was debated on February 25, 2004 and was defeated on April 13, 2004 at second reading. Leading up to the April 13 vote, the Conservative Party Caucus indicated that they would be supporting the bill in order to amend it at the committee level. This position was reversed immediately before the vote, leading to the C-236's defeat. The voting record can be found here, and the Canadian Federation of Students' media release can be viewed here.