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Bill C-309

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C-309
First Session, Thirty-ninth Parliament,
55 Elizabeth II, 2006
HOUSE OF COMMONS OF CANADA
BILL C-309
An Act to amend the Business Development Bank of Canada Act and the Canada Student Loans Act (student loan system)
first reading, May 18, 2006
Mr. Stoffer

391099

SUMMARY
The purpose of this enactment is to establish the Business Development Bank of Canada as a lender of guaranteed student loans and to provide that student loan interest rates are set annually at the rate of inflation for the previous year.
This will ensure that students and persons still paying off student loans have reasonable financing and are not unduly burdened by debt after completing their education.
Persons who have existing loans from the lenders previously established by the Canada Student Loans Act will be able to apply for loans from the Business Development Bank of Canada to pay them off and will then be covered by the new interest provisions.

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1st Session, 39th Parliament,
55 Elizabeth II, 2006
house of commons of canada
BILL C-309
An Act to amend the Business Development Bank of Canada Act and the Canada Student Loans Act (student loan system)
Preamble
WHEREAS the management of student loan programs by banks has resulted in unreasonable and inflexible interest rates and payment policies and has had a negative effect on post-secondary education in Canada;
WHEREAS student loans through banks have had interest rates applied that are well over the rates charged to business borrowers;
WHEREAS, as a result, many graduates face years with a heavy burden of loan repayment after completing their education and consequently are unable to meet their loan obligations;
AND WHEREAS student loan programs should incorporate interest policies that recognize that giving financial assistance to students is a national priority of investment in the future and not an opportunity for profit;
NOW, THEREFORE, Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
1995, c. 28
BUSINESS DEVELOPMENT BANK OF CANADA ACT
1. Section 4 of the Business Development Bank of Canada Act is replaced by the following:
Purpose of Bank
4. (1) The purpose of the Bank is
(a) to support Canadian entrepreneurship by providing financial and management services and by issuing securities or otherwise raising funds or capital in support of those services; and
(b) to provide guaranteed student loans to students under the Canada Student Loans Act.
Small and medium-sized enterprises
(2) In carrying out its purpose with respect to Canadian entrepreneurship, the Bank must give particular consideration to the needs of small and medium-sized enterprises.
Loans to students
(3) In carrying out its purpose with respect to guaranteed student loans, the Bank must provide loans to students in accordance with the Canada Student Loans Act
(a) at the rate set in accordance with section 5.1 of that Act; and
(b) using simple procedures and reasonable and flexible administration that recognizes that many students are not experienced in money management.
2. Subsections 14(2) to (4) of the Act are replaced by the following:
How entrepreneur loans, etc., may be made
(2) Loans, investments and guarantees in support of entrepreneurship may be made or given directly, through arrangements with other financial institutions or by the Bank as a member of a financing syndicate.
Criteria for making entrepreneur loans, etc.
(3) Loans, investments and guarantees in support of entrepreneurship may be made or given only where, in the opinion of the Board or any committee or officer designated by the Board,
(a) the person is engaged, or is about to engage, in an enterprise in Canada;
(b) the amount invested, or to be invested, in the enterprise by persons other than the Bank and the character of the investment are such that the Bank may reasonably expect that those persons will have a continuing commitment to the enterprise; and
(c) the enterprise may reasonably be expected to prove successful.
Complementary to commercial financial institutions
(4) The loans, investments and guarantees in support of entrepreneurship are to fill out or complete services available from commercial financial institutions.
Loans to students
(4.1) Loans to students must be made in accordance with the regulations made under the Canada Student Loans Act.
R.S., c. S-23
CANADA STUDENT LOANS ACT
3. The definition “lender” in subsection 2(1) of the Canada Student Loans Act is amended by striking out the word “or” at the end of paragraph (b), by adding the word “or” at the end of paragraph (c) and by adding the following after paragraph (c):
(d) on and after a date set by the regulations, the Business Development Bank of Canada;
4. The Act is amended by adding the following after section 5:
Interest at prime
5.1 In respect of a guaranteed student loan made by the Business Development Bank of Canada, the rate of interest shall be set every April 1 at the rate that equals the rate of inflation for the calendar year ending on the previous December 31.
New loan to pay off existing loan
5.2 A person who is a borrower under an existing guaranteed student loan that was made by a lender as defined in paragraphs 2(1)(a) to (c) may apply for and, subject to the other provisions of this Act and the regulations, be granted a loan from the Business Development Bank of Canada at the rate of interest described in section 5.1 for the purpose of paying off the existing guaranteed student loan, whether or not that loan is in good standing.
Published under authority of the Speaker of the House of Commons
Available from:
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