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CFS to take feds to court
By Nina Chiarelli
The Canadian Federation of Students is preparing to take the federal government to court in the name of student debt.
CFS will challenge recent amendments made to the Bankruptcy and Insolvency Act which would eliminate the 10-year waiting period students must go through before they are able to declare bankruptcy on outstanding student loans.
Jennifer Story, national deputy chair for CFS, said under the Canadian Charter of Rights and Freedoms, they are questioning whether the law is fair or if it discriminates against students. "Ultimately we'd like to have the amendment that prohibits the discharge of student loans repealed," Story said.
As it stands, the act enforces a waiting period on student loan bankruptcies which extends 10 years from the last date the individual was a student. This policy, amended in February 1998, changed the provisions which prevent the discharge of student debt from two years to 10. In the case of a person declaring bankruptcy from ordinary commercial debt, bankruptcy can be discharged after only nine months.
"Bankruptcy protection exists as protection for honest people and we're arguing that student debt shouldn't be treated differently than any other form of debt," Story said.
But in a taped statement, Finance Minister Paul Martin said: "There are systems in place to help deter the occurrences of bankruptcy, such as being able to deduct interest on student loans from taxable income.
"We recognize the burdens those debts cause students but this system will forgive 50 per cent of those debts over a 10-year period."
Still, this did not convince Jeff Finer, interim national director of the Canadian Alliance of Student Associations who agreed with CFS. "Ten years for bankruptcies is too long to wait. The policy does more harm than good it's far too excessive. CASA would like to see it reduced to a five-year wait."
Nick Iozzo, VP-education for the University Students' Council, said he felt CFS's initiative to change the act is a good one. "I'm not sure about a case of discrimination here, but the policy is definitely unfair. Students should not be given a different set of rules than the rest of Canadians in terms of bankruptcy. Everyone should be treated equally."
The system is only beneficial if you're making enough income to use the tax credits, Iozzo added.
While the federal government contends it has a system in place which is much more attractive than declaring bankruptcy, CFS released statistics in their current 1999 Fact Sheet information booklet which revealed only one per cent of one million students had declared bankruptcy.