Returning to university without taking out another student loan can still restart the waiting period for releasing older government student debt through bankruptcy proceedings, the Supreme Court of Canada ruled on April 17, 2025.
In Piekut v. Canada (National Revenue), 2025 SCC 13, a six-judge majority dismissed Izabela Piekut’s appeal over the effect of her 2013 consumer proposal. Her last studies ended in 2009, only four years before she filed the proposal, so the statutory seven-year restriction prevented the release she sought.
The decision resolved conflicting approaches among courts across Canada. The majority measured the period from the last time the borrower ceased to be a full- or part-time student under the applicable student-loan legislation before bankruptcy or the filing of a consumer proposal. It did not attach a separate clock to each earlier program or loan.
A later degree changed the calculation
Piekut attended university in several stretches between 1987 and 2009. She received federal student loans for her earlier programs but paid for her master’s degree herself. That final program ran from 2006 to 2009. She argued that 2003, when her last loan-funded studies ended, should instead determine the waiting period.
She filed a consumer proposal in October 2013 and received a certificate of full performance in December 2017. A consumer proposal is an arrangement with creditors under the Bankruptcy and Insolvency Act, rather than an assignment in bankruptcy. The student-loan discharge restriction nevertheless applied to her proposal.
Her application for a declaration releasing the debt failed in the British Columbia Supreme Court and Court of Appeal. The Supreme Court of Canada upheld that result. The issue was the effect of the proposal on the student loans, not whether she had completed the proposal itself.
One date, measured before the proposal
Writing for the majority, Justice Mahmud Jamal said the legislation looked backward from the bankruptcy or proposal date to when student status last ended. The provision asked when the borrower stopped being a student, without requiring that the latest studies had been funded by a government loan.
Student status was determined by the relevant federal, provincial or territorial loan legislation. Reading the English and French versions together, the majority rejected an approach that would give the bankruptcy provision its own disconnected definition of when someone ceased to be a student.
Jamal linked that interpretation to protecting publicly funded loan programs and giving borrowers a continuous period to turn their education into income and repay their loans. He reasoned that further education could improve repayment capacity even when the borrower financed it personally. These were the majority’s explanations of Parliament’s policy, not a finding that Piekut had acted dishonestly.
The majority also recognized concerns that returning to school could delay relief for much longer than seven years after an earlier degree. It pointed to repayment assistance and a separate hardship provision allowing discretionary relief after five years, subject to good faith and continuing inability to pay. Piekut had initially requested hardship relief but did not pursue it before the chambers judge or on appeal.
Dissent would preserve a completed seven-year break
Justice Andromache Karakatsanis, joined by Justices Sheilah Martin and Mary Moreau, would have allowed the appeal in part. They disagreed that every later return to school should undo the significance of a completed seven-year period outside education.
Their proposed interpretation also rejected the unrestricted approach advanced by Piekut. A borrower who resumed studies before completing seven continuous years outside student status would have to begin counting again after the later studies. But once a full seven-year break had elapsed, a subsequent return would not restore the statutory barrier for loans already outstanding before that break.
On that reasoning, the dissent would have granted relief for loans Piekut incurred before she ceased to be a student in April 1995. She did not return until September 2002, more than seven years later. The dissent sought to balance repayment of public loans with bankruptcy law’s objective of financial rehabilitation; it did not propose releasing all her loans.
All nine judges agreed on a separate enforcement issue. A student-loan creditor relying on the statutory exception did not need a further court order establishing that the debt survived, beyond filing a proof of claim. The majority distinguished these legislated loan obligations from fact-intensive disputes over debts allegedly arising from fraud.
The appeal was dismissed without a costs order because the federal respondent had not sought costs. The judgment determined the discharge issue arising from Piekut’s proposal; it did not report a later payment, settlement or current outstanding balance.
