How to Calculate 10 years on a Student Loan
The ten year rule seems simple enough. Section Section 178 (1) (g) of the Bankruptcy & Insolvency Act states that an order of discharge does not release a 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 where the date of bankruptcy of the bankrupt occurred:
i) Before the date on which the bankrupt ceased to be a full or part-time student, as the case may be, under the applicable Act or enactment, or
ii) Within ten years after the date on which the bankrupt ceased to be a full-time or part-time student.
The Act therefore indicates that it is not ten years from when the student got the loan; it’s ten years from when the student ceased to be a student. As an example, if you got a student loan in September, and finished school the following April, the ten years starts in April, not September.
To further confuse matters, the Canada Student Loan Regulations, section 4.1, state that:
Subject to paragraph 3(2)(b), a borrower ceases to be a full-time student on the earliest of
(a) the last day of the last confirmed period,
(b) the last day of the month in which the borrower no longer meets the applicable minimum percentage referred to in the definition “full-time student” in subsection 2(1), and
(c) the day on which the borrower’s interest-free period is terminated in accordance with subsection 9(4). SOR/95-331, s. 2; SOR/96-369, s. 3; SOR/2004-121, s. 2.
Therefore the period starts at the end of the month. As an example, if your final exam was completed on April 15, that’s the day you ceased to be a student, but the 10 years is calculated starting at April 30.
These rules change constantly, so contact a trustee for further information.
