New Student Loan in Nigeria – Education is a fundamental human right and a key driver of economic and social development. However, many Nigerians face financial barriers that prevent them from accessing quality education, especially at the tertiary level. According to the National Bureau of Statistics, only 10.3% of Nigerians aged 15-24 have completed tertiary education, while 19.9% have never attended school.
To address this challenge, President Bola Ahmed Tinubu has signed the Student Loan Act into law on June 12, 2023 (Democracy Day) to establish an education bank that will grant interest-free loans to Nigerian students pursuing higher education. The Student Loan Act provides an interest-free loan for destitute Nigerian students, with beneficiaries just repaying the amount received.
This landmark legislation is expected to have a positive impact on the education sector and the economy as a whole. In this article, we will explore some of the benefits and implications of the new student loan law for Nigeria.
Benefits of the New Student Loan
The Student Loan Law has several benefits for Nigerian students and the society at large. Some of these benefits include:
– Increased access to higher education: The Student Loan Law will enable more Nigerians to afford higher education by removing the financial burden of tuition fees. The law stipulates that all students seeking higher education in any public institution of higher learning in Nigeria shall have equal rights to access the loan without any form of discrimination arising from gender, religion, tribe, position or disability of any kind. The law also defines indigent Nigerians as those coming from a family with an income of less than N500k per annum, ensuring that the loan targets those who need it most.
– Improved quality of education: The Student Loan Law will also improve the quality of education in Nigeria by creating a competitive environment for public institutions of higher learning. The law will encourage more students to enroll in public institutions, which will in turn motivate these institutions to improve their standards and facilities to attract and retain students. The law will also reduce the dependence on private institutions, which often charge exorbitant fees and offer substandard education.
– Enhanced human capital development: The Student Loan Law will enhance human capital development in Nigeria by increasing the number and quality of graduates in various fields and disciplines. The law will enable more Nigerians to acquire the skills and knowledge that are relevant and demanded by the labor market and the economy. The law will also foster innovation and entrepreneurship among Nigerian youths, who will have access to funds to pursue their dreams and aspirations.
– Reduced poverty and inequality: The Student Loan Law will reduce poverty and inequality in Nigeria by empowering more Nigerians to escape the cycle of poverty through education. The law will enable more Nigerians to access better opportunities and incomes, which will improve their living standards and well-being. The law will also promote social mobility and inclusion, as more Nigerians from diverse backgrounds and regions will have access to higher education.
How to Apply For the New Student Loan in Nigeria
The Act also stipulates the mode of application.
To apply for the education loan, candidates are required to submit applications to the chairperson of the CBN-governor-headed committee through their respective banks.
The application is to be accompanied by a cover letter signed by the head of their institutions (vice-chancellors for university students, rector for polytechnic students and provost for students of colleges of education) and students affairs officer of the institution.
Students also submit a copy of their admission letter, at least two guarantor letters addressed to the chairperson of the committee, two passport photographs from each of the guarantors, their employer and evidence of employment. In cases where the guarantor is self-employed, their business registration with the Corporate Affairs Commission (CAC) or any other appropriate authority and their bankers, will be required.
“The Committee shall communicate to the applicant on the status of his application within 14 days of the receipt of any application,” the act states, adding that “disbursement shall be on the availability of funds.”
Implications of the Student Loan
The Student Loan Law also has some implications for Nigerian students and the government that need to be considered and addressed. Some of these implications include:
– Loan repayment: The Student Loan Law requires that beneficiaries repay their loans within a period of 10 years after graduation or after securing employment, whichever comes first. The law also stipulates that loan defaulters shall be liable to a fine of not less than N500k or imprisonment for a term not exceeding two years or both. Therefore, Nigerian students who access the loan need to be aware of their obligations and responsibilities, and plan accordingly for their loan repayment.
– Loan management: The Student Loan Law establishes the Nigerian Education Loan Fund, which is responsible for implementing the provisions of the Act, supervising and coordinating the management of student loans in Nigeria, receiving and screening loan applications from higher institutions, approving and disbursing loans to eligible applicants, monitoring the academic records of loan recipients, ensuring timely loan repayments, providing financial advice on educational matters, ensuring adequate loan security, engaging in other banking activities, taking legal action to recover loans and enforce the provisions of the Act. The Fund shall be domiciled with, managed, and administered by the Central Bank of Nigeria through the money deposit banks in Nigeria. Therefore, the government needs to ensure that the Fund is adequately funded, staffed, equipped, and monitored to ensure efficiency, transparency, and accountability in the loan management process.
– Loan sustainability: The Student Loan Law is a laudable initiative that has the potential to transform the education sector and the economy in Nigeria. However, the sustainability of the loan scheme depends on several factors, such as the availability of funds, the demand for loans, the repayment rate, the interest rate, the inflation rate, the exchange rate, and the economic growth rate. Therefore, the government needs to conduct regular reviews and evaluations of the loan scheme to ensure its viability and effectiveness in the long run.
Who can apply?
Sections 14 and 16 of the Act explained eligible applicants and the procedures of submitting applications to the selection committees.
According to the Act, only students of government-owned tertiary institutions can apply for the loan when it finally takes off.
“Subject to the provisions of any other enactment, all students seeking higher education in any public institution of higher learning in Nigeria shall have an equal right to access the loans under this Act without any discrimination arising from gender, religion, tribe, position or disability of any kind,” Section 2 states.
Section 23 of the Act further clarifies that “institutions of higher learning” means public universities, polytechnics, colleges of education and vocational schools established by the government.
Also, to be eligible, an applicant’s income or family income must be less than N500,000 per annum.
Students must also provide at least two guarantors, each of whom must either be a civil servant of at least level 12, a lawyer with at least 10 years post-call experience, or a judicial officer, or a justice of peace.
Also, Section 15 of that act states that a student will be disqualified from taking the loan if they have been found guilty of examination malpractice by any school authority, or convicted of a felony or any offence involving dishonesty or fraud.
An applicant will also be disqualified if they or their parents have defaulted in respect of a student loan or any loan granted to the person, or has been convicted of drug offences.
Repayment plan
The Act did not put a cap on the amount students can access or within a period of which they must conclude repayment.
It, however, states that the repayment of the loan begins exactly two years after the completion of the participation in the NYSC programme.
A beneficiary shall remit 10 per cent of their income to the Fund at the end of every month. For self-employed individuals, 10 per cent of their total monthly profit shall be remitted as part of the repayment plans.
Meanwhile, defaulters risk a N500,000 fine, two years jail term or both when they fail to repay their loans.
See also: How to Choose the Best Fast Loan App in Nigeria for Your Needs
Conclusion
The Student Loan Law signed by President Bola Ahmed Tinubu is a historic and commendable step towards improving access to higher education for Nigerian students. The law will have significant benefits for the education sector and the economy as a whole, as well as some implications that need to be addressed. The success of the law will depend on the cooperation and commitment of all stakeholders, including the government, the students, the institutions, and the banks. Together, we can make Nigeria a nation of educated and empowered citizens.
