PRESIDENT Bola Tinubu is pressing forward with the student loan initiative of his predecessor after the recent repeal of the 2023 Student Loan Act, and his assent to the 2024 Student Loan Bill. Essentially, the new law addresses some of the defects in the former act. While this law seems laudable at face value, the intricacies of its provisions remain a concern.
The new law establishes the Nigerian Education Loan Fund as a full-fledged body corporate that provides loans to eligible Nigerians, covering tuition, fees, charges, and living expenses. The fund will oversee 1.0 per cent of all taxes and levies accrued to the Federal Government.
Unlike the repealed version, the new law removed the family income barrier of N500,000, expunged the provision of a guarantor, and the parent’s loan history prerequisite. It includes students seeking vocational, development, or skill-acquisition programmes. The policy retains the three-year jail term for felony for defaulters, while expecting the obligor to start repayment two years post-National Youth Service Corps.
Despite the changes, scepticism remains. The notion that the scheme was meant to justify the recent price hike in tuition, and cancel the bursaries, grants, and scholarships to brilliant and indigent students continue to give grave concerns. No serious government should replace scholarships, bursaries, and grants with student loans.
Also, given the limited moratorium on the loans, students who are unable to get jobs quickly would be bogged down with debt and face the danger of imprisonment. The fact that good jobs are few in Nigeria compounds the headache for borrowers. For now, the minimum wage is N30,000 per month. The law provides a debt forgiveness caveat at death.
In contrast, the unemployed in the United Kingdom are supported by the government with the Jobseeker Allowance until they can secure a job. These buffers are not available here. However, in the 1980s, students who studied Education courses were awarded bursaries by both state and the Federal Government. The government should restore this.
Nigerian undergraduates are currently facing about a 200 per cent hike in tuition to coincide with the introduction of the SLB in 2023. The rationale behind the scheme, including university financial autonomy and salvaging the universities from poor funding, defeats the goal of providing education to indigent Nigerians. This has led to reported protests and fear about the rise of dropouts.
Really, it looks like the government wants to stop financing tertiary education. This is not wise because education is the bedrock of modern society.
Student loans can become a quagmire. According to Forbes, about 44 million borrowers owe $1.7 trillion in student loan debt in the United States. The Council on Foreign Relations stated that although university degrees in the US have the potential to gain employment in high-paying jobs, student loan debt and other accrued debts reduce the overall standard of living of the borrower.
Recently, the Joe Biden administration signed an executive order to forgive up to $20,000 of Pell Grant loans and $10,000 of non-Pell grants for those who make less than $125,000 per year.
Nigeria has a chequered history with student loans. A 1992 paper in Higher Education said the Federal Government established a student loan board at different times in 1972, 1973, and 1991. It provided funds to finance undergraduate and postgraduate studies within and outside the country. The paper said that loan recovery and repayments “were disappointing.”
Therefore, Nigeria must take lessons from its past and other countries where student loans have become a cog in the wheel of progress.
Instead of hiding under the loan scheme, the federal and state governments must invest heavily in scholarships, grants, and bursaries, particularly for areas where there is a personnel demand like teaching, the sciences, technology, engineering, and medicine.
