The
     
    
   
   
    
     
       
     
    
   
   
    
     
      PT
      ae
      a
      elie
     
    
   
   
    
     
      News
     
    
   
   
    
     
       
     
    
   
   
    
     
       
     
    
   
   
    
     
      December
      3,
      1996
     
    
   
   
    
     
        
     
    
   
   
    
     
      Students
      ill-informed
      on
      Bankruptcy
     
    
   
   
    
     
      By
      David-James
      Fernandes
     
     
      The
      Varsity
      University
      of
     
     
      Toronto
     
    
   
   
    
     
      While
      the
      federal
      gov-
     
     
      ernment
      cracks
      down
      on
      the
     
     
      rising
      number
      of
      students
      who
     
     
      are
      turning
      to
      bankruptcy
      as
      a
     
     
      last-ditch
      solution
      to
      their
      fi-
     
     
      nancial
      woes,
      critics
      say
      the
     
     
      real
      issues
      behind
      the
      bank-
     
     
      ruptcies
      are
      being
      ignored.
     
    

    
     
      Bill
      C-5,
      passed
      in
      the
     
     
      House
      of
      Commons
      on
      Oct.
     
     
      23,
      changes
      federal
      laws
      so
     
     
      that
      students
      declaring
      bank-
     
     
      ruptcy
      within
      two
      years
      of
     
     
      completing
      or
      discontinuing
     
     
      their
      studies
      will
      no
      longer
      be
     
     
      released
      from
      paying
      back
     
     
      their
      student
      loan
      debt
      unless
     
     
      they
      successfully
      prove
      to
      the
     
     
      courts
      that
      special
      circum-
     
     
      stances
      apply
      in
      their
      case.
     
    

    
     
      Svend
      Robinson,
      NDP
     
    
   
   
    
     
       
     
    
   
   
    
     
      critic
      for
      postsecondary
      edu-
     
     
      cation,
      calls
      the
      changes
      ap-
     
     
      palling
      and
      cites
      massive
      fed-
     
     
      eral
      spending
      cuts
      as
      a
      major
     
     
      factor
      in
      the
      increase
      of
      stu-
     
     
      dent
      bankruptcies.
     
    

    
     
      "It's
      [the
      government's]
     
     
      bankrupt
      policies,
      their
      mas-
     
     
      sive
      cuts
      in
      federal
      transfer
     
     
      payments
      to
      the
      provinces
      for
     
     
      postsecondary
      education
      that
     
     
      have
      driven
      up
      tuition
      fees
      and
     
     
      increased
      the
      debt
      burden
      that
     
     
      students
      are
      facing,"
      he
      said.
     
    

    
     
      "And
      instead
      of
      re-
     
     
      sponding
      to
      those
      concerns
      by
     
     
      strengthening
      student
      aid,
      par-
     
     
      ticularly
      a
      national
      grants
      plan,
     
     
      or
      by
      moving
      to
      create
      jobs,
     
     
      they're
      simply
      cracking
      down
     
     
      and
      punishing
      students.
      It's
      an
     
     
      appalling
      policy."
     
    

    
     
      Moriss
      Bodnar,
      Liberal
     
     
      MP
      for
      Saskatoon-Dundurn,
     
     
      the
      member
      who
      introduced
     
    
   
   
    
     
      the
      legislation,
      says
      the
     
     
      changes
      are
      meant
      to
      deter
      stu-
     
    
   
   
    
     
      dents
      from
      using
      bankruptcy
      ,
     
    
   
   
    
     
      as
      an
      easy
      way
      out
      of
      paying
     
     
      back
      their
      loans.
     
    

    
     
      "Our
      statistics
      show
      that
     
     
      70
      per
      cent
      of
      students
      who
     
     
      claim
      bankruptcy
      are
      doing
      so
     
     
      within
      the
      first
      two
      years
      of
     
     
      graduation.
      Under
      the
      student
     
     
      loans
      program,
      students
      have
     
     
      a
      six
      month
      moratorium
      on
     
     
      which
      they
      do
      not
      have
      to
      pay
     
     
      back
      their
      student
      loans.
      They
     
     
      may
      also
      have
      this
      period
      ex-
     
     
      tended
      to
      a
      total
      of
      two
      years.
     
     
      They
      are
      claiming
      bankruptcy
     
     
      during
      a
      period
      when
      there
      is
     
     
      no
      financial
      pressure
      for
      them
     
     
      to
      do
      so."
     
    

    
     
      Bodnar
      also
      says
      the
     
     
      decision
      to
      make
      it
      a
      two-year
     
     
      period
      where
      bankruptcy
      will
     
     
      not
      discharge
      student
      loans
      is
     
    
   
   
    
     
      actually
      a
      compromise.
     
    

    
     
      "There
      were
      people
     
     
      who
      presented
      to
      the
      [Bank-
     
     
      ruptcy
      and
      Insolvency
      Advi-
     
     
      sory]
      Committee
      that
      were
     
     
      pushing
      for
      five
      years
      or
      even
     
     
      more,"
      he
      said.
     
    

    
     
      The
      committee,
      which
     
     
      directed
      the
      formation
      of
      C-5,
     
     
      represented
      consumers,
      busi-
     
     
      ness,
      lenders,
      insolvency
      prac-
     
     
      titioners,
      and
      governments.
     
     
      Over
      its
      three
      year
      course,
      it
     
     
      heard
      from
      more
      than
      100
      pri-
     
     
      vate
      sector
      insolvency
      experts
     
     
      but
      virtually
      no
      students.
     
    

    
     
      Brad
      Lavigne,
      national
     
     
      chairperson
      of
      the
      Canadian
     
     
      Federation
      of
      Students,
      says
     
     
      the
      government's
      changes
      re-
     
     
      flect
      a
      lack
      of
      understanding
     
     
      as
      to
      why
      students
      are
      going
     
     
      bankrupt.
     
    

    
     
      "By
      making
      it
      more
      dif-
     
    
   
   
    
     
      ficult
      for
      students
      to
      claim
     
     
      bankruptcy,
      the
      federal
      gov-
     
     
      ernment
      is
      forgetting
      the
      fun-
     
     
      damental
      reasons
      why
      bank-
     
     
      ruptcies
      occur
      --
      unemploy-
     
     
      ment,
      underemployment,
      and
     
     
      high
      debt,"
      he
      said.
     
    

    
     
      Lavigne
      says
      there
      has
     
     
      been
      a
      significant
      increase
      in
     
     
      the
      amount
      of
      debt
      that
      post-
     
     
      secondary
      students
      incur.
      He
     
     
      says
      prior
      to
      1990,
      the
      debt
     
     
      load
      of
      the
      average
      student
     
     
      was
      $16,000.
      After
      that,
      the
     
     
      average
      debt
      load
      rose
      to
      over
     
     
      $24,000
      per
      student.
     
    

    
     
      "The
      government
      hasn't
     
     
      taken
      away
      the
      problem.
      It
      has
     
     
      only
      taken
      away
      the
      statistic,"
     
     
      Lavigne
      said.
     
    

    
     
      Bill
      C-5
      is
      currently
     
     
      between
      second
      and
      third
      read-
     
     
      ing
      in
      the
      Senate
      and
      has
      been
     
     
      referred
      to
      a
      Senate
      Commit-
     
     
      tee
      for
      further
      debate
      and
      revi-
     
     
      sion.
     
    
   
   
    
     
      SERVING
      ALL
      YOUR
      ENTERTAINMENT
      NEEDS
     
     
      IN
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      NEW
      YEAR