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Bill C-217

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2nd Session, 37th Parliament,
51 Elizabeth II, 2002

House of Commons of Canada

BILL C-217

An Act to amend the Business Development Bank of Canada Act and the Canada Student Loans Act to provide for a student loan system that is more supportive of students

Preamble

Whereas the management of student loan programs by chartered banks has resulted in unreasonable and inflexible interest and payment policies and had a negative effect on post-secondary education in Canada;

Whereas student loans through chartered banks have had interest rates applied that are well over the rates charges to business borrowers;

Whereas, as a result, many graduates face years with a heavy burden of loan repayment after completing their education and consequently many graduates 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 pursuant to the Canada Student Loans Act .

Small and medium-sized enterprises

(2) In carrying out its purpose with respect to 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 rates set by the regulations under 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) In the case of loans in support of entrepreneurship, the loans, investments and guarantees 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.

Complementa ry 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 under the Canada Student Loans Act.

R.S., c. S-23

CANADA STUDENT LOANS ACT

3. The definition of ``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) with effect from 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 advanced by the Business Development Bank of Canada, the rate of interest shall be set from time to time and be adjusted every April 1 to the rate that equals the rate of inflation for the calendar year ending on the previous December 31, determined in accordance with the regulations.

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 mentioned in any of paragraphs (a) to (c) of the definition of that term in subsection 2(1), 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 mentioned in section 5.1 for the purpose of paying off the existing guaranteed student loan, whether or not the existing loan is in good standing.

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