STUDENT LOANS in Nigeria
Nigeria is delving into the world of student loans - albeit interest free. Here's all you need to know about it, the Act, and its implementation thus far
On 12 June 2023, Pres. Bola Ahmed Tinubu signed into law the Access to Higher Education Act AKA the Student Loan Act to ease access to higher education by granting interest-free loans to qualified citizens.
The Act wants to improve access to higher education in universities, polytechnics, and colleges of education by giving interest-free loans to Nigerian citizens, those with less than NGN500,000 (Five Hundred Thousand Naira) annual or NGN42,000 (Forty-Two Thousand Naira) monthly personal or family income, amongst other criteria.
The loans, financed by the Nigerian Education Loan Fund (NELFUND), are sourced from;
Education bonds
Education endowment fund schemes
One percent of all taxes, levies, and duties coming to the federal government of Nigeria from the Federal Inland Revenue Service (FIRS), Immigration & Customs service
One percent of profits from oil and other minerals
Donations, gifts, grants, or any other form of revenue.
Application for the loan is made through the applicant's bank to the Chairman of the Committee in charge of disbursing the funds. Loan repayment begins two years after completing the National Youth Service Corps (NYSC), a mandatory one-year program for all graduates of Nigerian universities, through a ten percent deduction of your salary or total profit at source. In case of a default, the disbursing committee can exercise all legal actions to recover loans disbursed.
This isn't the first student loan act or scheme Nigeria has tried to enact, the first was in 1972 and it died. It is being said that this new law will leverage technology to ensure its functionality. However, the risk of government mismanagement, embezzlement, Nigeria's poor identity and addressing system, and the unlikeliness that the government will engage indigenous startups to assist in this initiative persists.
The enactment of this law is commendable, but it poses questions like;
How will this law impact the quality of education in public and private universities?
How will it impact the activities of ed-tech startups?
Could this put millions of Nigerians in debt?
Is it even practicable with the steep barriers to entry/access? or is it just another fancy smoke-n-mirror for government embezzlement?
What happens if a loan beneficiary doesn't get a job within two years after NYSC to keep up with the repayment schedule?
Due to Nigeria's history of Academic Staff Union of Universities (ASUU) strikes, what happens when the universities are on strike for long periods and the beneficiary neither uses the loans nor goes to school? is he still bound to pay the unused sum?
Wouldn't it have been better to focus on improving the education system and its environs instead of introducing loans?
This Student Loan Scheme was set to be launched on 14 March 2024, but it was postponed yet again (as had happened with prior set dates) with no specific start date.
According to the Nigerian Education Loan Fund (NELFUND), the loan scheme was postponed due to some corrections that were being made around the launch.
RECENT UPDATE*
On 24 May 2024, the Nigerian Education Loan Fund (NELFUND) opened the application portal for the first or pilot phase of the student loan scheme, for students from federal tertiary institutions across the country.
You can apply for the loan by following these steps at the official website;
STEP ONE: Create an Account
Click “Apply Now”
Click “Get Started”
Answer the question on this page by clicking “Yes, I am a Nigerian”
Verify your educational information by selecting your school and inputting your matriculation number. Your details should pop up to show that your school has uploaded it.
Click “Verify with JAMB” and enter your JAMB (Joint Admissions and Matriculation Board) data. Students whose National Identification Number (NIN) has not been registered with JAMB will have an input field where they can enter their NIN for validation.
Enter your email address, password, and confirm the password in the fields provided, and click “Create Account”
Verify your email with the link sent to it.
This concludes the account creation process.
STEP TWO: Complete your profile
Login with your verified email and password
Click “Proceed to contact details”
Update contact details with your Phone Number, Full Residential Address, State of Residence, and Local Government Area of Residence, and click “Proceed to Educational Details”.
Update your educational details by selecting your Higher Institution and inputting your Matriculation Number, then click “Proceed to Account Details”
Enter your BVN (bank verification number), select your Bank Name, and enter your Account Number to verify.
Click “Save Changes” to complete your profile.
STEP THREE: Loan Application
Log into the application and Click “Request for Student Loan”
If you want an upkeep loan, click the check box, and click Continue, if all you need is the institutional charge, click the “Continue” button.
Upload supporting documents. Your admission letter is compulsory but your Student ID and Institution Invoice are optional
Click the checkbox for the policy and declaration and click “Continue”
Read the loan overview and click the checkboxes for both the Terms & Conditions and GSI (Global Standing Instruction) Mandate then click “Submit Application”
*GSI Mandate is an instruction (written or digital) executed by a borrower being an Account Holder in a Participating Financial Institution, authorizing the recovery of an amount specified by the Creditor from any/all accounts maintained by the Account Holder across all Participating Financial Institutions - according to the Central Bank of Nigeria.
Click “Loans” to view the status of your application.
As part of the federal government’s efforts to ease the financial strain of higher education, this interest-free student loan scheme is commendable. However, several lacunas in the Student Loan Act (exemplified by the questions above) raise doubts about its implementation, efficiency, and probability of success.
But what do you think?
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