On June 12, 2023, President Bola Ahmed Tinubu signed into law the Students Loans (Access to Higher Education) Act, 2023 heralding a new dawn for higher education access in Nigeria. This Act repealed the Nigerian Education Bank Act Cap. N104, Laws of the Federation of Nigeria, 2004, with the primary aim to empower financially disadvantaged Nigerians, commonly referred to as ‘indigent’ individuals, by providing them with greater opportunities to pursue higher education and contribute positively to the nation’s economic development.
The Act established the Education Loan Fund, which serves as a financial support system for students seeking higher education. Beneficiaries to the fund can repay the loans through convenient installments beginning two (2) years after completing their participation in the National Youth Service Corps (NYSC) program as stated in section 18(1) of the act. The Education Loan Fund will oversee all aspects of the loan process, including requests, grants, disbursements, and loan recoveries.
To ensure sustainable funding, the Act outlines various revenue streams for the Education Loan Fund. These include one percent (1%) of all federal government profits from oil and mineral revenues, one percent of taxes, levies, and duties collected by the Federal Inland Revenue Service (FIRS), Nigeria Immigration Service (NIS), and Nigerian Customs Service (NCS). Additionally, contributions from education bonds and education endowment fund schemes along with donations, grants etc., will support the Fund. The Act also emphasizes the importance of diversifying income sources by engaging in other productive activities.
MANAGEMENT AND ADMINISTRATION OF THE FUND
According to Section 5(2) of the Act, the management and administration of the Education Loan Fund will be housed within the Central Bank of Nigeria (CBN) and overseen by a specialized 11-person committee, with the CBN governor serving as chairperson. This committee holds crucial responsibilities, including defining the loan application process, eligibility criteria for loan recipients, and repayment schedules, among other key details. Section 5(5) of the Act mandates the committee to establish comprehensive regulations and guidelines governing the management of the fund and requires all stakeholders to adhere strictly to such regulations and guidelines.
WHO CAN APPLY?
By sections 14 and 16 of the Act, only students enrolled in government-owned tertiary institutions will be eligible to apply for the loan once the program is implemented. Also, in section 2 of the Act, all students aspiring to pursue higher education in any public institution in Nigeria are entitled to equal access to the loans offered under this Act without any form of discrimination based on gender, religion, ethnic group, position, or disability.
Section 23 of the Act defines “institutions of higher learning” as public universities, polytechnics, colleges of education, and vocational schools established by the government. These institutions fall under the scope of the Act, therefore, eligible students attending any of these establishments can benefit from the loan scheme without any prejudice.
GUIDELINES FOR LOAN APPLICATION PROCESS
Section 14 of the Act outlines comprehensive guidelines for loan applications including specific eligibility criteria for prospective applicants. To qualify for the interest-free loan, applicants must satisfy the following conditions:
- The applicant must have secured admission into a federal or state government university, polytechnic, college of education, or vocational school;
- The applicant’s annual income, or that of their family, must not exceed 500,000 Naira per annum;
- Students must furnish the required details of at least two guarantors, each of whom must fulfill one of the following professional roles: a civil servant of at least level 12, a lawyer with at least ten years of post-call experience, or a judicial officer or justice of peace.
The application process involves submitting required documents, including admission and acceptance letters, guarantor letters, and evidence of guarantors’ employment status. To apply for the education loan, candidates must submit their applications to the chairperson of the CBN-governor-headed committee through their respective banks. The application package should include a cover letter signed by the head of their institutions (vice-chancellors for university students, rectors for polytechnic students, and provosts for students at colleges of education) and the students’ affairs officer of the institution; a copy of their admission letter; at least two guarantor letters addressed to the committee’s chairperson; two passport photographs of each guarantor; and evidence of their employment, including details of their employers. For self-employed guarantors, their business registration with the Corporate Affairs Commission (CAC) or any other relevant authority, as well as their bank information, will be required, as stated in section 16(1) of the act.
Section 18 (4) provides that the loan processing should be completed within thirty (30) days of receipt of the application, with applicants informed of their status within 14 days. The Act also specifies that loan disbursement will be subject to the availability of funds.
DISQUALIFICATION FROM THE LOAN
Section 15 of the Act outlines specific conditions that disqualify students from obtaining the loan such as being found guilty of examination malpractice, being convicted of a felony, drug conviction, or any offense, or having a history of defaulting on loans by applicant or their parent. These are provided to ensure the loan benefits those who meet the necessary standards of integrity and responsibility.
REPAYMENT PLAN
The Act streamlines a systematic approach to loan repayment. As earlier mentioned, repayment of loan will commence two (2) years after the completion of the National Youth Service Corps (NYSC) program. Beneficiaries will contribute 10% of their salary directly deducted by employers and credited to the Fund. Self-employed individuals will contribute 10% of their monthly profit to the Fund and furnish essential details, including business name, address, location, registration documents (if applicable), bank details, partner names, and director/shareholder names, to the Committee within 60 days. In instances of a job change, beneficiaries are required to inform the Chairman of the Committee within 30 days of starting their new employment.
Failure to comply with the provisions outlined in section 18 (5) or assisting in any non-compliance constitutes an offense. Those found guilty, upon conviction, could face a fine of N500,000, imprisonment for two years, or both. This measure ensures adherence to the contribution requirements and promotes accountability among self-employed beneficiaries.
CONCLUSION
The Student Loan Act offers a promising avenue for affordable education, boasting a simple and efficient application documentation process. However, uncertainties linger concerning the Act’s overall effectiveness and benefits for Nigerians. This is primarily due to concerns over potential subsequent increases in admission and education fees for students in federal and state government schools[1]. Furthermore, the contention raised by the Academic Staff Union of Universities (ASUU) asserts that tuition fees are typically not permissible in government-funded institutions under relevant local laws.
One omission in the Act is the lack of a specified cap on loan amounts accessible to students or a defined timeframe within which they must complete their repayments, these could be addressed through specific loan agreements. Also, in spite of the repayment terms being flexible, graduates may encounter obstacles when dealing with employment uncertainties or difficulties in establishing profitable self-employment ventures. These situations could hinder their ability to repay loans, potentially resulting in defaults and lasting consequences such as securing future loans. To ensure the success and sustainability of the loan program, it becomes imperative to take proactive steps in supporting struggling borrowers and offering alternative repayment options.
According to Business Insider Africa, critics argue that such measures, including potential imprisonment and hefty fines, might unduly impact individuals, hindering their chances of recovery and positive societal contributions. To find the right balance between holding borrowers accountable and fostering a supportive environment, continuous evaluation and consideration are crucial aspects of this legislation.[2] Addressing these concerns will be vital to ensuring the Act’s effective implementation and meaningful impact on providing accessible education opportunities for financially disadvantaged students. With diligent oversight and continuous improvements, the Act has the potential to usher in a new era of higher education accessibility in Nigeria.
– WRITTEN BY ANGELA TOCHUKWU ELELE FROM A & E LAW PARTNERSHIP, ABUJA.
[1] https://www.premiumtimesng.com/news/top-news/604856-asuu-ssanu-officials-others-fault-nigerias-new-students-loan-scheme.html (accessed 8th of August 2023)
[2] https://africa.businessinsider.com/local/careers/nigerias-student-loan-bill-pros-and-cons-explained/bw2m66s (accessed 4th of August 2023)
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