The students’ loan scheme

The Federal Government has announced that the implementation of the students’ loan scheme will commence in September, this year.  An inter-ministerial committee has also been set up to fine-tune the Student Loan Bill recently signed into law by President Bola Ahmed Tinubu. The ‘Access to Education Bill, 2023’, otherwise called Student Loan Bill was sponsored in 2016 by the Speaker of the 9th House of Representatives, Femi Gbajabiamila.

It was reintroduced in 2019 but was passed by the National Assembly in November, 2022. The Law repeals the Nigerian Education Bank Act.  It is fashioned to enable Nigerian students in public and private tertiary institutions to access loans at interest-free rates, as well as boost the educational pursuit of indigent students across the country.

The students’ loan scheme is in fulfillment of one of the campaign promises of President Tinubu to expand access to higher education and reduce the financial burden of indigent students.    Sections 14 & 16 of the Act stipulate eligible applicants and the procedures of submitting applications for the loan to the relevant committee set up for that purpose. The Act also requires that an intending applicant for the loan must come from a family with an annual income of not less than N500,000, as well as provide at least two guarantors who should either be civil servants above Grade level 12 or a lawyer with not less than 12 years post-call experience.

The Student Loan also promotes equal opportunity and social mobility by providing financial support to students who need it.  Also, applications for the loan are to be made through the Students’ Affairs Offices of their respective institutions and should be forwarded to the Education Boards of their constituents, and thereafter submitted to the Ministry of Education for approval within one month, and disbursement within the Minister’s approval.

However, the Act says that prospective students could be disqualified from applying for the loan if they have defaulted on any loan before, or have proven cases of examination malpractice, or have committed any offence of dishonesty, fraud or drug abuse, or their parents involved in any case of loan default. The loan will be funded from multiple sources that will be domiciled in the Ministry of Education. They are education bonds, education endowment fund scheme, one per cent of all taxes, levies, duties accruing to the government of the federation.

The rest include sources from the Federal Inland Revenue Service (FIRS), Nigeria Customs Service, Nigeria Immigration Service, one per cent of all profits from oil sales and other minerals, and revenues accruing to the Fund by way of donations, gifts, grants. The Fund will be managed by a Special Committee stipulated in Section 5(1-2) of the Act.

Other members of the Committee include the Minister of Education, Chairman, National Universities Commission (NUC), a representative of the forum of University Vice-Chancellors, that of Polytechnic Rectors, as well as the forum of Provosts of all Colleges of Education, and the representatives from the Nigeria Labour Congress (NLC), Nigerian Bar Association (NBA), and the Academic Staff of Union of Universities (ASUU).    

Despite doubts in some quarters over the implementation of the scheme, we believe that the students’ loan scheme should be given a chance. Nevertheless, it should never be used as a ploy to increase tuition fees in universities and other institutions of higher learning across the country.

Therefore, we call for a seamless implementation of the scheme as well as an efficient loan recovery strategy. Let the loan scheme be open to all Nigerian students, irrespective of parental background. Restricting it to indigent students alone is discriminatory. Let those in charge of disbursing the loan bear in mind that the previous students’ loan scheme was plagued by high default rate. We hope the current exercise will not be afflicted by the same ailment.  For the sustainability of the scheme, the repayment rate ought to be very high. In America, for example, the students’ loan portfolio currently totals more than $1.6 trillion, owed by about 43 million borrowers. Nigeria’s students’ loan scheme should not be allowed to suffer a similar fate.

We advise the Federal Government to remove all doubts surrounding access to the students’ loan scheme before it takes off. The clarification has become necessary given the level of poverty in the country, and to avoid a likely adverse effect on millions of prospective students who will apply for the loan. Although the loan scheme is a populist programme, it should be allowed to succeed.