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OSAP loans still breaking the bank

Diana Forbes | Interrobang | News | September 12th, 2005

As it stands, bankruptcy is still off limits to those graduates who have accumulated thousands of dollars in student debt.

Over the summer the Canadian Federation of Students (CFS), an organization representing a coalition of Canadian post-secondary students and student unions, heard the ruling on a constitutional challenge they filed against the Bankruptcy and Insolvency Act concerning those who have acquired student debt.

The federal government amended the Act in 1998 to prohibit those with student debt to claim bankruptcy until ten years after completion of their last course. CFS challenged the amendment under the Canadian Charter of Rights and Freedoms, claiming students are being treated unfairly.

"We were trying to say that students as a group under the constitution can't be discriminated against," said George Soule, National Chair of CFS. "Just because you have a student loan you will be treated differently then those with just debt."

According to a CFS press release, Justice Gordon Sedgwick ruled against CFS's challenge, "on the basis that student loan borrowers do not constitute as a protected social category that should qualify for protection from discrimination."

Doreen Whitehead, manager of Financial Aid at Fanshawe, said before the 1998 amendment some students would accumulate high amounts of government debt and intentionally claim bankruptcy to avoid payment.

Under the current amendment, Whitehead said there are payment options and debt relief opportunities for students who are either unemployed or earning a low wage after completion of school.

"I think the government has done a lot for students after graduation," said Whitehead. "Students are now more responsible for the agreement they signed."

Under the revised amendment, Financial Aid offices are required to monitor the grades of OSAP recipients to ensure that grades are upheld. If students cannot complete 60 per cent of their semester workload, they will be given a warning and be placed on probation. If students do not improve during their second semester they will not be eligible for OSAP until their grades improve.

According to Soule, the average family income for those students claiming bankruptcy, prior to the amendment, was $14,000.

"Students in most need were filing for bankruptcy," he said.

Soule said that claiming bankruptcy is not the easy way out for most graduates, considering it's a long and tedious process that is not easily forgotten by society.

A survey conducted by Statistics Canada in 2002 claimed that 41 per cent of college graduates left school with an average debt of $12,600 in 2000. That amount is up 21 per cent compared to students who graduated in 1995, and up 76 per cent compared to students who graduated in 1990.

According to Whitehead, approximately 4000 Fanshawe students are currently receiving financial aid from the government.

Even though they experienced a setback, Soule said the CFS will continue their fight on legal and political levels.

"Students must realize that education is their right," said Soule, "not a financial burden."
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