Opinion: Students’ Loan, A Burden to Students Or A Solution?

It was a relief for Nigerian students when President Bola Ahmed Tinubu’s passage of the National Student Loan bill filtered nationwide. The Access to Higher Education Act, 2023, also known as the Students Loan Act, creates an Education Loan Fund to assist Nigerians in financing their higher education while paying in instalments two years after participating in the National Youth Service Corps (NYSC) program. 

The bill, first introduced in 2016 by Femi Gbajabiamila, the immediate past Speaker of the House of Representatives, failed to garner traction. It was then reintroduced three years later, in 2019, and, it was only in November 2022 that it received the attention of the National Assembly. The act defined how the funds would be raised, preserved, and managed. Some of the advantages of the Students Loan Act for Nigerians include the provision of an interest-free loan for destitute Nigerian students pursuing higher education in the country’s state-owned universities, polytechnics, and colleges of education. The Act also ensures that all struggling Nigerian students have equal access to loans regardless of gender, religion, tribe, or disability.

While some Nigerians believe that the bill would serve as a solution for students with little or no financial means to pursue their academic studies in the institutions of their choice, others fear that the loan application, repayment and requirements processes would end up being a burden, especially with the rate of unemployment in the country. According to the act, a recipient must contribute 10% of their monthly salary to the fund, and defaulters face a N500,000 fine, a two-year jail term, or both if they fail to repay their loans.

Looming unemployment and debt burden

The Student Loan Act states that “beneficiaries of the student loan are expected to begin repayment of the loan two years after your National Youth Service Corps. 10% of your pay will be deducted by your employer at source and sent to the Student Loan Fund. You must notify your employer of a job change within 30 days of starting the new position. If you work for yourself, you must contribute 10% of your monthly gross earnings to the fund. The loan committee will receive all pertinent business-related documentation within 60 days.”

The drawbacks to the payback process include the unemployment rate in the country, which is steadily increasing, and the question on the minds of many Nigerian students is whether or not they will be able to repay the loan debt two years after NYSC when they are often struggling to survive without good paying jobs.

Nigeria’s unemployment rate stands at 33%, according to a 2022 analysis by Statista. In the previous year, this figure was said to be 32.5 per cent. Moreso, historical data reveals that Nigeria’s unemployment rate has steadily increased in recent years. What is left to be seen is the looming consequences of psychological trauma for graduates who will have to work twice as hard to repay the loan debt to the government.  Many fear that the student loan will  be difficult to pay even if they are lucky to get employed immediately after graduation. 

A Means to Privatisation of Public Institutions

Students seeking loans under the Act must apply through their respective institutions if some specific conditions are met. The CBN Governor would then designate a special committee to assist in funding distribution as well as carry out other duties, including as examining student loan applications, authorising and disbursing loans, and keeping track of students’ academic achievement, among others.

On the other hand, it is widely acknowledged that education is critical to a country’s economic growth and development, and this Act is believed to be one of the instruments used to restructure Nigeria’s educational system. However, there are indications that the Nigerian government plans to privatise government-owned institutions, especially with the proliferation of private universities with high fees. Hence, students pursuing higher education will have no option but to toe the line of taking a student loan.

Some of the provisions of the student loan act state that the student candidates’ or their families’ annual income must be less than N500,000. Also, the Student must submit at least two guarantors: the guarantor must be a civil servant of at least level 12 in the service; or a lawyer with at least 10 (ten) years post-call experience; a Judicial officer; or a lawyer with at least 10 (ten) years post-call experience.

Many fear that, with these provisions, tertiary education will become the exclusive preserve of the wealthy upper class, especially in a country where more than 90% of the population lives in abject poverty. If privatisation is the answer, it’s only likely to widen the gap between the rich and the poor. It will deny many affordable and quality education, increase the rate of illiteracy, and reduce academic performance at the tertiary level.  There are concerns that these provisions will further increase the number of out-of-school citizens in the country, which develops into a poverty mobilisation country.