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Education - Student Loans. Piekut v. Canada (National Revenue)
In Piekut v. Canada (National Revenue) (SCC, 2025) the Supreme Court of Canada dismissed an insolvency appeal, here involving "when a bankrupt is released from their government student loan debts under the Bankruptcy and Insolvency Act".
Here the court canvasses student loan legislation across Canada:(2) Student Loan Legislation
[34] The federal, provincial, and territorial governments across Canada provide student loans to individuals for the purpose of pursuing post-secondary education. The federal student loan legislation consists of the Canada Student Loans Act, R.S.C. 1985, c. S-23 (for loans made before August 1995), the Canada Student Financial Assistance Act, S.C. 1994, c. 28 (for loans made after August 1995), and their associated regulations. Each of the provinces and territories has a student loan scheme, which operates in conjunction with, or independently of, the federal government. In most jurisdictions, the provincial or territorial government works with the federal government to deliver student loans. Yukon provides student grants and works with the federal government to deliver federal student loan funding, but does not have its own loan program. Quebec, the Northwest Territories, and Nunavut operate their own student loan programs independent of the federal government (see Act respecting financial assistance for education expenses, CQLR, c. A-13.3, s. 38; Student Financial Assistance Regulations, R.R.N.W.T. 1990, c. S-20, ss. 1(2) and (3) and 6(7); Government of Nunavut, Department of Education, FANS Student Handbook, August 2024 (online); Employment and Social Development Canada, Canada Student Grants and Loans — What student grants and loans offer, July 9, 2024 (online); see also Library of Parliament, Treatment of Student Loans Under Canadian Bankruptcy Law, Background Paper PRB 01-26E, November 26, 2008, at p. 2; S. Ben-Ishai, “Government Student Loans, Government Debts and Bankruptcy: A Comparative Study” (2006), 44 Can. Bus. L.J. 211, at pp. 215-19; and S. Ben-Ishai, “Student Loans and Bankruptcy: Five Years Later”, in J. P. Sarra and B. Romaine, eds., Annual Review of Insolvency Law 2014 (2015), 221, at pp. 231-36).
[35] The student loan programs across Canada generally share three features.
[36] First, borrowers receive student loans based on financial need rather than commercial lending criteria, such as the borrower’s credit risk or future ability to repay the loan. For example, the conditions of eligibility under the Canada Student Loans Act, s. 14, and the Canada Student Financial Assistance Act, s. 12, provide that students are generally eligible for student loans if they have “attained a satisfactory scholastic standard” and are “in need of a loan” or of “financial assistance” (see also Mallory, at paras. 77-78; N.P., at para. 47).
[37] Second, a borrower generally does not accrue interest on, and is not required to repay, their student loans until they cease to be a student. If a borrower ceases to be a student but then becomes a student again, they also generally do not accrue interest on and are not required to repay their loans until they again cease to be a student (see Canada Student Loans Regulations, SOR/93-392, ss. 3(3) and 11; Canada Student Financial Assistance Regulations, SOR/95-329, ss. 7, 11.1, 12.2 and 12.6; Student Financial Assistance Regulation, Alta. Reg. 298/2002, Sch. 2, ss. 24(1)(c) and 32; Ontario Student Grants and Ontario Student Loans, O. Reg. 70/17, ss. 23, 24 and 30; Student Aid Regulation, Man. Reg. 143/2003, ss. 21 and 24; The Saskatchewan Student Direct Loans Regulations, R.R.S., c. S-61.1, Reg. 1, ss. 2(n) and 9 to 12; Act respecting financial assistance for education expenses (Que.), ss. 23 to 25.1; Regulation respecting financial assistance for education expenses, CQLR, c. A-13.3, r. 1, s. 81; Direct Student Loan Regulations, N.S. Reg. 342/2008, s. 11; Student Financial Assistance Regulations, N.L.R. 105/03, ss. 5.2 and 5.3; Student Financial Assistance Act General Regulations, P.E.I. Reg. EC709/10, s. 26; Student Financial Assistance Regulations, R.R.N.W.T. (Nu.) 1990, c. S-20, ss. 21, 24(1), 25 and 29).
[38] Third, when student loans are repayable, generally the borrower must combine or consolidate all their loans into one debt for repayment (see, for example, Ontario Student Grants and Ontario Student Loans, ss. 28 and 29; The Saskatchewan Student Direct Loans Regulations, s. 13; Student Financial Assistance Regulations (N.L.), s. 5.8; Student Financial Assistance Act General Regulations (P.E.I.), s. 28; Student Financial Assistance Regulations (Nu.), ss. 23 and 25; Canada Student Loans Regulations, s. 7; for loans governed by the Canada Student Financial Assistance Regulations, see the Master Student Financial Assistance Agreements for each Canada student loans-participating province, almost all of which provide for consolidation (National Student Loans Service Centre, Additional Resources, August 19, 2024 (online))).
[39] The BIA scheme relating to student loan debts works harmoniously with federal, provincial, and territorial student loan legislation. Section 178(1)(g) of the BIA expressly states that an order of discharge does not release the bankrupt from any debt or obligation in respect of a loan made under “the Canada Student Loans Act, the Canada Student Financial Assistance Act or any enactment of a province that provides for loans or guarantees of loans to students”. In addition, s. 178(1)(g)(i) expressly refers to the date on which a bankrupt ceased to be a full- or part-time student under these enactments.
[40] The federal student loan regulations applicable to this appeal address how a borrower qualifies as a full- or part-time student and when a borrower will “cease” to be a full- or part-time student. A borrower generally loses student status on the last day of the last month of their confirmed study period or on the last day of the month when their course load drops below the statutory minimum (Canada Student Financial Assistance Regulations, ss. 2(1) “full-time student” and “part-time student”, 8(1) and 12.3; Canada Student Loans Regulations, s. 4.1(1)). A borrower who has “ceased” to be a student can later regain student status (Canada Student Financial Assistance Regulations, ss. 7(1) and 12.2; Canada Student Loans Regulations, s. 3).
[41] Provincial and territorial legislation, regulations, or policy documents similarly define an individual’s student status and when they cease to be a full- or part-time student (see Student Financial Assistance Regulation (Alta.), Sch. 1, s. 1(1)(f), and Sch. 2, ss. 1(1)(h) and (m) and 24(1); Student Aid Regulation (Man.), ss. 10, 11, 20 and 22; Student Financial Assistance Regulations (N.L.), s. 2(e) and (e.1); Direct Student Loan Regulations (N.S.), s. 2(f); Post-Secondary Student Financial Assistance Act, S.N.B. 2007, c. P-9.315, s. 1 “qualifying student”; Ontario Student Grants and Ontario Student Loans, ss. 9 and 24 to 27; Student Financial Assistance Act General Regulations (P.E.I.), s. 1(h) and (j.1); Act respecting financial assistance for education expenses (Que.), ss. 9 and 32; The Saskatchewan Student Direct Loans Regulations, s. 2(j); Student Financial Assistance Regulations (Nu.), s. 1(1) “full-time student” and “part-time student”, and amending regulation Student Financial Assistance Regulations, amendment, Nu. Reg. 046-2021; British Columbia, Ministry of Post-Secondary Education and Future Skills, StudentAid BC, Policy Manual 2024-2025 (2024)). At paras 51-107 the court walks through the statutory interpretation of BIA s.178(1)(g) regarding the non-discharge of student loans, which is useful for it's review of the history and purpose of the student loan systems.
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