The Federal Government established the Nigerian Education Loan Fund under the Students Loan Act 2023 to deepen accessible and affordable public tertiary education. Our education lawyers share an overview of the Students Loans (Access to Higher Education) Act 2023.
Background
The Students Loans Act 2023 repealed the Nigerian Education Bank Act 1993. The 1993 Nigerian Education Bank Act replaced the Students Loans Board Act. It transferred the assets and liabilities of the Students Loans Board Act to the defunct Nigerian Education Bank.
When the federal government signed the Students Loans Act 2023, it replaced the 1993 Nigerian Education Bank Act. The hope is that the federal government thoroughly studied the effectiveness or causes of ineffectiveness of the defunct Nigerian Education Bank Act 1993.
TheGuardian report of February 2023 claims that approximately 20 million Nigerians of its approximately 200 million population need to be enrolled in school.
An undated UNICEF report acknowledged that primary education is officially free and compulsory in Nigeria. The UNICEF report claimed that 61% of 6 to 11-year-olds regularly attend primary school and only 35.6% of children aged 36-59 months receive early childhood education.
Perhaps, the Students Loans Act is the federal government’s brilliant approach to bridging the critical skill gap arising from the Japa syndrome without addressing the rising unemployability rate among graduates of Nigerian public universities and the diminished global ranking.
Who Benefits under the Students Loans Act
Any undergraduate or post-graduate student in a public university whose parents or guardian’s annual income is not more than five hundred thousand Naira can apply for a loan under the Students Loans Act.
Only the National Assembly can review the limit on students’ parents’ or guardians’ annual income. A grave bottleneck in a country with a national monthly minimum wage of thirty thousand Naira or three hundred and sixty thousand Naira yearly.
Credit Scoring
It is incorrect to think that the federal government’s Students Loans target Angels, not Nigerian students. In any case, Nigerian postgraduate or undergraduate students in public universities that want to borrow from the Nigerian Education Loan Fund must scale the following conditions:
- Proof of admission into a Stated or Federal government-owned public university, polytechnic, college of education or any technical and vocational education and training (TVET).
- Student’s income or family income must be less than five hundred thousand Naira
- Minimum of two guarantors who must be a civil servant of at least grade level 12, a lawyer of at least ten years post-call, a judicial officer, or a justice of the peace.
The following disqualifies the student from accessing the Students Loan:
- Students or parents or guardians’ record of previous default concerning any loan by an organization – a casual search at a credit bureau reveals a default
- Proof of exam malpractice
- Conviction of a felony or any offence involving dishonesty or fraud, or drug abuse
A student’s parent or guardian’s previous default on a loan agreement is visited on the child or ward. The target students are from very low-income families, and an immaculate credit history may be a setback.
Indeed, a record of previous default on any loan by an organization should not bar Student’s access to the loan because it is a secured credit – if not over-secured. Both guarantors are generally persons of worth in addition to the student’s future income.
It is doubtful if students from such low-income families may have access to the required guarantors under the Students Loan Act.
How to Apply
Students apply for the Students Loan through their home institution. Every application must be submitted to the student’s bank, who forwards the application to the Committee
We hope the Special Committee responsible for the Students Loan will deploy technology for application, credit scoring, onboarding, disbursement, monitoring, repayment and recovery.
The loan under the Students Loans Act is for tuition only. It is unclear if tuition is Nigeria’s most significant barrier and the highest cost of higher education.
When and how you Repay
Any student in a public tertiary institution in Nigeria can apply for a student loan subject to credit securing and accessibility criteria, regardless of whether it is a newly admitted or an existing student.
The student beneficiary under the Students Loan Act must begin repayment two years after the National Youth Service Corps (“NYSC”) programme is completed as follows:
- If an employee, the employer deducts and remits 10% of the salary to the Nigerian Education Loan Fund
- If self-employed, remits 10% of its total profit monthly to the Nigerian Education Loan Fund
In any case, the student beneficiary must notify the Chairman of the Special Committee under the Nigerian Education Loan Fund within 30 days of resuming new employment, given that default and aiding default are offences under the Students Loan Act.
The Students Loan Act imposes a due diligence burden on an employer to determine if the prospective employee is a student beneficiary.
Self-employed student beneficiaries must inform the Chairman of the Special Committee within 60 days of becoming self-employed and update the following data:
- Business name,
- address and location
- registration documents, if registered
- name of bankers
The NYSC Act exempts students up to 30 years or older from the compulsory national youth service corps. The Students Loan Act does not cater for the NYSC exempted students. No publicly aggregated data on the ratio of students under 30 years to 30 years and older is available.
Concluding
The Students Loan Act serves a fraction of Nigeria’s higher education students, not the majority. Given the strict timelines under the Students Loan Act, technology is crucial to implementation, monitoring and debt recovery.
Commendably, the Students Loan is interest-free. But a five hundred thousand Naira annual income ceiling on the student or family’s income is regrettably low.
Data may not be readily aggregated, but most families considering higher education in Nigeria may live above five hundred thousand Naira annual income. Using the national monthly minimum wage as a yardstick, finding parents who earn less than forty-two thousand Naira monthly is a social and security risk.
Over-securitization of the Students Loan is an apparent setback. The proportion and access of the required guarantors to the targeted families may become a form of class struggle or social unrest.
The Students Loan should be secured on future employment. Insurance is a sufficient wager against loss of employment, an event that allows borrowers not to repay employment-related loans.
The Chairman of the Special Committee under the Students Loan Act should ensure that any regulations under the Students Loan Act address inevitable setbacks for the good of the Nigerian students and the SDGS Goals.
