^ Interesting question. Although I am confident that the answer I gave, as further elaborated by Delgar, is accurate, my understanding of this comes from my Debtor-Creditor Relations and Bankruptcy/Insolvency courses in law School around 2000 and I don't practice in the area specifically. I have not followed the trends of bankruptcy and insolvency so I really can't comment on whether a change in the law has rectified a perceived problem. Also, although I am unsure of the complete history on the issue, I do believe that the change regarding student loan debt was in response to a trend of increasing abuse of this type that resulted from rising education costs and student debt that really took off in the 90's. I know when I graduated from law school I had a debt that was about 50% higher than my first year's salary. I would never have considered bankruptcy as a short cut to getting rid of that, but I could see the temptation...
As far as interest rates for student loans go, I don't know a lot about that any more, but do recall that in the late 90's early 00's there were significant changes to the administration and funding of student loans and the government's level of involvement. At the time I had my student loans, they were interest free for the duration of my studies, then upon graduation you negotiated a repayment plan at market rates with your lender. I believe I started paying mine back with a floating rate that was around 10% or so. I don't think the changes to BIA had any effect in terms of lowering rates, but may have stopped them from getting out of hand as implied by Delgar. Someone who was actually working in the industry during the period the changes were implemented would likely have a more sophisticated view than mine.
EDIT: As a matter of curiosity, if you want to see a summary of the thoughts behind the 1997 changes and the subsequent relaxing of the rules in 2008, you can read about it here:
http://www.parl.gc.ca/Content/LOP/Re.../prb0126-e.htm
My answer was definitely incomplete. (I completely forgot about the changes to student loans in the mid-90's for example, which is when I was starting my undergrad.)
BTW, I'm glad this thread is back on track. Rocky's information has been good. I can appreciate the perspective that not everybody wants the nerd answer to the question, but didn't see it from that viewpoint in the first response I quoted and used a poor choice of words in my response.
