Piekut v Canada (National Revenue) resolves uncertainty on the release of government student loans in BIA proceedings. The Supreme Court clarifies that government student loans are not released upon discharge from bankruptcy if the bankrupt was a full- or part-time student, whether government-funded or not, within seven years of filing.

By Haddon Murray, Partner; Heather Fisher, Associate; and James Aston, Associate, Gowling WLG (Canada) LLP

The Supreme Court of Canada released its decision in Piekut v Canada (National Revenue) on April 17, 2025. CAIRP intervened before the Supreme Court to make submissions in this case.

The Issue: When does the “Discharge Clock” Start Ticking?

Section 178(1)(g)(ii) of the Bankruptcy and Insolvency Act, RSC, 1985, c. B-2, as amended (the “BIA”) excludes student loans from discharge from bankruptcy if the debtor ceased to be a student less than seven years before filing for bankruptcy or a consumer proposal. Until now, courts had split between two approaches to the interpretation of when a debtor “ceases to be a full- or part-time student”.

The so-called “single-date approach” held that there was only one date to calculate the discharge period for all government student loans. Under the single-date approach, at the date of bankruptcy the courts look back to the most recent date when the debtors ceased to be a full- or part-time student to determine if all of their student loan liabilities could be released upon discharge.

By contrast, the “multiple-date approach” tied ceasing to be a student to the specific loan that gave rise to the government debt. Under this approach courts held that the language in section 178(1)(g) excluding from release “any debt or obligation in respect of a loan made under the [student loan legislation] … where the date of bankruptcy of the bankrupt occurred … (ii) within seven years after the date on which the bankrupt ceased to be a full- or part-time student” was to be read together such that ceasing to be a student was tied to the loan that gave rise to the liability.

This allowed for the possibility of multiple dates a debt can be discharged if a debtor completed their studies, took a break, and then returned to school and obtained a further student loan. The seven-year period would begin after the first period of study in respect of the first loan, and after the second period of study in respect of the second loan. In addition, the multiple date approach would not re-start the clock if a student took a break and then returned to school but did not obtain any further government funding.

In Piekut, a six to three majority of the Supreme Court endorsed the single-date approach: the seven-year period runs from the last date the debtor ceased to be a full- or part-time post-secondary student in any capacity.

Background: A Return to School, and a Return to Court

Izabela Piekut obtained government student loans for undergraduate and graduate studies between 1987 and 2003. She later pursued a Master’s degree between 2006 and 2009, funding it privately. In 2013, she filed a consumer proposal under the BIA. Relying on the fact that she had received no government student loans after 2003, she argued that her student loan debt was dischargeable, having ceased to be a student more than seven years prior.

The British Columbia Supreme Court and Court of Appeal rejected this argument, finding that, despite self-funding her 2006-2009 degree, her return to school meant that she did not cease to be a student until 2009 and so the clock had not yet run out. British Columbia courts applied the single-date approach and so her 2013 proposal fell within the statutory seven-year bar, making her student debt non-dischargeable. In contrast to British Columbia and Quebec courts, all other jurisdictions have historically applied the multiple-date approach.

The matter reached the Supreme Court after leave was granted to resolve the interpretive divide.

The Majority Speaks: One Student Career, One Discharge Clock

Writing for the majority, Justice Jamal (joined by Chief Justice Wagner and Justices Côté, Rowe, Kasirer and O’Bonswain) concluded that the BIA contemplates only one cessation date: the final time the debtor stopped being a student.

The Court applied the well-established interpretative framework considering the text, context and purpose of the legislation.

With respect to text, both the majority and minority reiterated that, wherever possible, the French and English text must be read in to be consistent. The majority went on to hold that a consistent reading supported the single-date approach a the singular phrasing in English (“the date”) and French (“cette date”) suggested a singular point of reference.

With respect to legislative purpose, the majority held that parliament introduced the student loan carve-out to protect the integrity and sustainability of government loan programs. A flexible or multiple-date interpretation, the Court warned, would risk abuse—allowing debtors to strategically re-enter and exit short programs to trigger early discharge rights. The single-date approach supports the policy goals of reducing government losses, ensuring a sustainable government student loan program for future generations, and giving borrowers time to capitalize on their education to repay their publicly funded loans.

Justice Jamal went on to hold that, unlike the absurd results arising from a multiple-date approach, the single-date approach was fair to borrowers. Although returning to school, even if self-funded, would re-start the clock, the majority held that this was not unfair to borrowers as there are other mechanisms to address borrowers experiencing financial hardship, such as principal/interest loan repayment relief programs and the hardship exception set out in section 178(1.1), which provides that section 178(1)(g) would not apply to a successful applicant.

Finally, the majority held that statutory presumptions, like the presumption that section 178(1) must be narrowly construed, are residual interpretive rules that only apply where legislative analysis produces ambiguity between two approaches. In this case, the majority found there to be no ambiguity that the single-date approach was appropriate and, consequently, found that the residual presumption had no role to play in interpreting section 178(1)(g)(ii).

As Justice Jamal noted, the single-date rule “ensures that the seven-year period functions as a meaningful buffer between the completion of one’s education and the ability to shed student debt through insolvency proceedings.” On that basis, Piekut’s claim failed: her student status ended in 2009, and her 2013 filing fell short of the required seven-year period.

The Dissent: A More Equitable Reading?

In dissent, Justice Karakatsanis (joined by Justice Martin and Moreau) took issue with the rigidity of the majority’s position.

The dissent would reject the application of the single-date or multiple-date approach finding that each produced absurd results. Instead, the dissent advocated for a “seven clear years” approach—under which a debtor should be eligible for discharge once they have completed a continuous seven-year period as a non-student, even if they later returned to school for unrelated or self-funded education.

The dissent raises concerns that the majority’s approach could effectively impose lifetime liability on borrowers who pursue further education, however modest or unrelated to the original debt.

Relying on the single- or multiple-date approach, the dissent argues, too heavily favours either the specific goals of section 178(1)(g)(ii) or of the BIA as a whole. For the dissent, the “statutory bar” reading better aligns with the rehabilitative goals of the BIA, particularly in an era where Canadians increasingly return to education throughout their careers, while still providing the debtor a real opportunity to repay their student debt by establishing the seven-year period.

Implications for Insolvency Professionals

The decision brings much-needed clarity to an issue that has long troubled consumer insolvency trustees, debtor counsel, and lenders. The Supreme Court’s ruling establishes a uniform national standard to interpret section 178(1)(g)(ii), replacing inconsistent decisions in different jurisdictions.

Going forward, insolvency practitioners must advise clients that:

• The relevant “cessation date” is the last time the debtor ceased being a full- or part-time student, not the last time they received a government loan.

• Not all education triggers this regime—the Regulations applicable to the loans in question define what course load defines a full- or part-time student.

• Later self-funded education restarts the clock, even if it occurs years after the government loan was issued.

• Careful documentation of educational history is now more important than ever in assessing eligibility for discharge.

• No separate judicial determination is required for the government to prove a student loan. A student loan claim can be determined through the summary process of filing of a proof of claim in a bankruptcy or proposal – a student loan creditor need not take other steps to protect their claim.

• A bankrupt can still apply to the Court for the hardship exception set out in section 178(1.1) as long as at least five years has passed from the “cessation date”.

Conclusion: Finality, But at What Cost?

Piekut delivers much-needed certainty. For insolvency professionals, the decision gives a clear roadmap for timing in consumer proposals and bankruptcies involving student loan debt. For individual bankrupts, the message is clear: returning to school—at any age and for any reason—can have long-term implications for their ability to discharge old government student loans.

Beyond providing clarity, the decision articulates the limits of the presumption of a narrow construction of section 178(1) in favour of a more creditor-friendly interpretation of the BIA in the student loan context, favouring the sustainability of public loan programs over the fresh start principle. That said, the Court left open the possibility of legislative reform, noting that Parliament is best placed to reconsider whether the balance struck in the current version of the BIA remains appropriate in today’s education and labour market context.