On Monday, the 12th of June, President Bola Tinubu assented to the Student Loans Act which was introduced by Femi Gbajabiamila, the former Speaker of the House of Representatives in 2016.
The Bill introduced by Gbajabiamila in 2016 was titled, “An Act to Provide Easy Access to Higher Education For Nigerians Through Interest-Free Loans From Nigeria Education Bank Established in this Act with a View To Provide Education for All Nigerians and for Related Matters.”
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In the Final Bill that was passed by the National Assembly, a National Education Loan Fund will be established instead of a National Education Bank. By the action of the President, the Nigerian Education Bank Act Cap. N104, Laws of the Federation of Nigeria, 2004 has been repealed and replaced with the Student Loans (Access to Higher Education) Act, 2023.
The action by Tinubu is in line with his manifesto of creating a students’ loan program, “We will institute a pilot student loan regime like the program established by the Lagos and Kaduna State Governments. This will expand access to education to all Nigerians regardless of their backgrounds.”
1. The Fund will be domiciled and managed by the Central Bank of Nigeria
According to Subsection(2), Section 5 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 for the purpose set out under Section 6 of this Act. The Act also states that the CBN Governor will set up a Special Committee to perform the functions of the Fund which the CBN Governor will head.
2. The source of the Fund
According to Section 12 of the Act, the sources of the fund shall include education bonds, education endowment fund schemes, 1% of all taxes and duties accruing to the Government of the Federation from FIRS, Nigerian Immigration Service, and Nigerian Customs Service, 1% of all profits accruing to the Government of the Federation arising from oil and other minerals, and all money that comes into the Fund, whether through donations, gifts, grants, endowments, or other means.
3. Eligible candidates for the loans
According to Section 14 of the Act, only students that have secured admission to Nigerian universities, polytechnics, colleges of education, or vocational schools established by the Federal Government or any state of the Federation. The loan exclusively caters to students enrolled in public tertiary institutions.
The annual income of the applicant or their family must not exceed N500,000. And the applicant must provide at least two guarantors and each of the guarantors shall be;
- A civil servant of at least level 12 in the service.
- Lawyer with at least 10 years of post-call experience,
- Judicial officer or a Justice of Peace
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4. Terms of disqualification
As per Section 15 of the Act, a student will be ineligible to access the loan if they have a documented history of loan default with any organization. Other reasons for disqualification include being found guilty of exam malpractice by any school authority, being convicted of a felony or drug offence, or if any of the student’s parents have previously defaulted on loans.
5. Repayment conditions
Beneficiaries of the loans are expected to commence repayment of the loans two years after the completion of their National Youth Service Corps programme. The repayment will be made through a direct deduction of 10% from the beneficiary’s salary, which will be done at the source by the employers and credited to the Fund. And if the beneficiary is self-employed, he will remit 10% of his monthly profit to the Fund.
6. Defaulters liable for jail term
According to Subsection (60, Section 18 of the Act, any self-employed beneficiary who defaults in submitting their business details as outlined in the provision of the Act will be liable to a conviction of a fine of N500,000 or imprisonment of two years.
Implications of the Act
A significant implication of this Act can be linked to Tinubu’s Renewed Hope manifesto which concerning student loans noted, “At the same time, this will give institutions the ability to charge more cost-reflective tuition fees.” There is a suggestion that the new Act may potentially lead to an increase in the tuition fees at public tertiary institutions in Nigeria.
Public education in Nigeria has battled with a paucity of funds, even as Nigeria’s yearly budget for education remains a far cry from UNESCO’s recommended 15-20%. And this has always pitted the academic unions, especially ASUU against the Federal Government as they continuously seek augmented funding for universities. This new Act can be seen as the government’s attempt to transfer the responsibility of funding tertiary institutions to the citizens.
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Another factor to put consideration is the unemployment rate in the country. In a country with a youth unemployment rate above 53%, the government is confident of students gaining jobs immediately after graduation.
