The 2003 Federal Budget announced enhancements to the Canada Student Loans Program ("CSLP") which included extending eligibility for financial assistance to student loan borrowers who have filed a proceeding under the BIA ¹ .

Regulatory amendments to the Canada Student Financial Assistance Regulations and the Canada Student Loans Regulations came into effect on May 11, 2004 ("the Amendments"). The effect of the Amendments is, among other things, to allow student loan borrowers who have filed a proceeding under the BIA to apply for additional student loans to complete an existing program of study. The Amendments are not retroactive and, therefore, the changes will only apply to borrowers who have filed a proceeding under the BIA on or after May 11, 2004.

Prior to the Amendments, students who filed a proceeding under the BIA were not eligible for new student loans. Furthermore, they could not obtain the benefits of debt management measures (i.e. interest relief and debt reduction in repayment which are described in more detail below).

New Measures

The following is a brief description of the changes to the CSLP resulting from the Amendments:

Availability of new student loans and interest free-status:

1. A student who files a proceeding under the BIA may now be eligible to obtain new loans for a maximum of 3 years, provided he/she remains in the same program of study and continues in full-time status; and
2. he/she may also be eligible for interest-free status on existing loans while in-study.

Interest Relief:

1. eligible students who are experiencing temporary hardship in repaying their loans will not be required to make any payments of interest or principal. The Government of Canada will pay the monthly loan interest.

Debt Reduction in Repayment:

1. eligible students who are experiencing exceptional long-term financial difficulty may obtain a reduction of the principal amount of their student loan.

For further details regarding the Amendments and eligibility criteria for the enhanced measures, please refer to the details as published in the Canada Gazette at the following link: http://canadagazette.gc.ca/partI/2003/20031220/pdf/g1-13751.pdf.

Amendments to the relevant regulations starts at page 4020.

¹ The "proceeding under the BIA" refers to an assignment or receiving order, consumer proposal, Div 1 proposal and proceedings under Part X - orderly payment of debts.