For Us By Us: The harsh realities of Nigeria’s new students loan act

a temporary solution for Nigeria's dire education system

For a number of young Nigerians, the first quarter of the year held significant weight in our political and socio-economic lives. Since the EndSARS protests of 2020, where a number of young Nigerians took to the streets with placards and called for an end to years of systemic oppression, extra-judicial killings and unjust profiling, we’ve continued to witness a shift in our public consciousness. United in minds, hearts and spirits, the experience which descended into one of the most atrocious nights of violence and bloodshed, has ignited a fire in the hearts of many young Nigerians to speak out against injustices from the ruling class.

This year, we’ve already witnessed this vigour from young Nigerians in the gubernatorial elections which saw the public condemnation of the Independent National Electoral Commission (INEC) with a record number of 93.4 million voters, the highest in our nation’s storied history. The result of those elections are felt greatly by Nigerians today following President Bola Ahmed Tinubu’s swearing in last month. Already, the incumbent President is wasting no time to carry out new reforms, a pertinent new policy being the new student loan bill which has been, by turns, celebrated, dissected and frowned at.


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According to the Students Loans (Access to Higher Education) Act 2023, this new legislation aims to revolutionise access to higher education by providing crucial financial support to Nigerian students from low-income families and backgrounds. “We will institute a pilot student loan regime…this will expand access to education to all Nigerians regardless of their backgrounds,” President Tinubu wrote in his manifesto, Renewed Hope. “At the same time, this will give institutions the ability to charge more cost-reflective tuition fees. Because of the current employment rates and other conditions, the loan program will have a maximum limit any student may borrow and must have flexible repayment provisions.”

On closer look, the Student Loans Act provides the establishment of a student loan bank that provides interest free loans to any student interested in pursuing higher education in a tertiary institution. The funds known as the Nigerian Education Loan Fund, established under the law, will be managed and administered by various stakeholders, including the Central Bank of Nigeria and commercial banks. It reportedly includes mechanisms for monitoring academic performance, ensuring timely loan repayment, and preventing fraudulent practices. The funds will be provided directly to the institution the student in enrolled after a series of official checks on the student.

For years, the education system has continued to decline with incessant strikes and class actions erupting throughout the school semester, leaving many students out of class and professors clamouring for raised fees. According to the United Nations, unless Nigeria acts fast on the education issue, the country might not achieve the global agenda for universal inclusive and equitable basic education for all school-age children by 2030. As such, a Student Loan bill of this nature appears to be a step in the right direction for the young generation. However, as all government bills show, there is always finer print to comb through.

On the surface, the Loan Act looks like a reasonable solution for the less than satisfactory state of our education system. In order to be eligible, one must of have secured admission into a federal or state university, polytechnic, college of education or vocational school. The student’s income or family’s income must also be less than ₦500,000 ($1,000) per annum or ₦42,000 ($88) per month. Further, the student must provide two guarantors who is either a civil servant of at least level 12, a lawyer with, at least, 10 years of post-call experience or a Judicial officer or a Justice of peace.

It gets trickier when it comes to repayment terms. According to the Student Loan Act, after a program is completed, the student will be responsible for loan repayment with the set time frame of two to twenty years hence beneficiaries of Nigeria’s student loan will commence repayment two years after completion of the National Youth Service Corp (NYSC) programme. Ideally, once a secure mode of employment is obtained, 10% of the student’s salary will be deducted on a monthly basis by their employer. However, those who become self-employed risk a two-year jail term or fine if they refuse to pay back the loan as 10% of their monthly profits.

In addition to the employment issues that might arise, the conditions to successfully acquiring the loan are still stringent. Less privileged families still have to prove their earning capacity with bank statements that they are unlikely to have in their possession. Recently the ASUU president, Mr Emmanuel Osodeke projected that the loan conditions were “not practicable”, adding that more than 90% of students won’t meet its “requirements.” Moreover, the student loan bill functions on the account that the undergraduate is able to secure a mode of employment after university.

This already poses a challenge for the country and its falling job market which KPMG’s International Global Economic Outlook report states is expect to continue to be a major challenge in 2023. KPMG’s report also details that the “unemployment rate is expected to rise to 40.6%, an uptick form 37.7% back in 2022. Although the incumbent President has already begun to promise swift changes to the country’s unemployment rates in three years of office, the effects of his fiscal and economic policies remain to be ascertained.

For the unemployed, little is known about how the Student Loans Act will affect them in the future. This gap in the law might give the government of the day leeway to impose further sanctions in the future. That being said, provisions need to be made for new entrants to not only successfully secure, but sustain credible employment above minimum wage. Where the beneficiary is self-employed, the Act states that one shall remit 10% of his total profit monthly to the student loans account prescribed by their bank.

Given these apparent grey areas in the law, it is left to be seen how the incumbent government will implement and redress all the matters arising from the Bill in the future. All around us, world governments are struggling with facilitating and sustaining student loans. For instance, in the US, the Supreme Court has barred the Biden administration from carrying out its plan to extinguish up to $20,000 in federal student loan debt, and millions of borrowers will continue to struggle under the weight of their loans.

According to a recent report by McKinsey, inflation-adjusted student debt has increased by 45% over the past decade, and repayment rates have cratered. Given this steep incline in the West, it’s hard to remain optimistic about similar government policies back at home. Without a doubt, the student loan will serve as a temporary relief from financial burdens. However, the stringent terms for qualifying and eventually repaying the loan are glaring issues that the government must take into account.

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