On Monday, President Bola Tinubu fulfilled his promise to revitalize education by signing the Students Loan Bill into law. The Act aims to provide financial support to indigent Nigerian students pursuing higher education in government-owned universities, polytechnics, and colleges of education. This simply means that the implementation of this initiative has the potential to alleviate the negative consequences including the need to drop out of school, defer semesters, or struggle to balance part-time jobs with their studies, which they often encounter.
As stated in the Act, the loans provided exclusively cover tuition fees and are directly disbursed to the universities. They do not encompass accommodation or living expenses. It is important to note that a student loan is not provided as physical cash; rather, it grants students access to educational facilities and resources without the requirement of paying tuition fees. This ensures that students can attend school and obtain their certificates without incurring any financial burden. While the initiative is undoubtedly praiseworthy it has raised controversies amongst Nigerians.
Due to a prevailing trust deficit between the Nigerian government and its citizens, scepticism remains regarding the new student loan as a potential channel for corruption by those in positions of power. Nigeria’s social investment programmes have always been used as a conduit for corruption. For example, past initiatives aimed at aiding the underprivileged, such as N-Power, the school feeding programme, and the CBN’s Anchor’s Program, have been plagued by a history of failures. But beyond this scepticism, some of the requirements to get access to the loan could be problematic.
One of the drawbacks of the current system is the inflexibility of loan repayments. The education loan fund is planning to implement the PAYE (Pay As You Earn) model where loan recipients will start repaying their loans upon getting a job. So if you are employed, your employer will deduct 10% of your salary directly and remit it to the Student Loan Fund. For self-employed individuals, a monthly remittance of 10% of your total profit will be required. But you must have started payment two years after completing your National Youth Service Corp (NYSC) program. Failure to comply with these repayment requirements may result in penalties, including a ₦500,000 fine, two years of imprisonment, or both. This has raised legitimate concerns.
First, while there is a need for loan defaulters to dance to music, having jail as the performance stage is draconian. Defaulters need not be sent to prison, instead, they should be blacklisted, so they can’t get any loan whatsoever in the future.
The employment prospects of graduates have also raised concerns about how students would fulfil their loan obligations. Nigeria’s unemployment rate stands at a prohibitive 33% as of 2020, and it is projected to increase to 40.6% according to KPMG’s estimates, compared to the previous year’s rate of 37.7%. Given these circumstances, the ability of Nigerian students to repay their loans becomes uncertain in the absence of job opportunities.
Lastly, while a two-year period or longer, as many have requested, may be reasonable, there should not be a standardized repayment plan for all loans. Instead of deducting a fixed 10% monthly, individuals may prefer to make larger payments or settle the entire amount at once, depending on the nature of their post-NYSC employment.
According to the Act, students need two guarantors: a civil servant with 12 or more years in the service and a lawyer who is at least 10 years post-call to be eligible for the loan. This may be too much to ask. A colleague argued that individuals who have close connections to government workers at this level willing to act as a guarantor may not necessarily require this type of loan.
From another end, this system could potentially create a lucrative business opportunity for lawyers and civil servants who are willing to offer their services as guarantors in exchange for payment. In reality, this development could undermine the integrity of the scheme as it provides a means to bypass the intended process eventually.
Another aspect that warrants amendment is the requirement that disqualifies students from receiving the loan if their parents have defaulted on a student loan or any other loan. It raises the question of why the child should bear the consequences of their parent’s actions, considering that the student alone bears the responsibility of repaying the loan.
Largely, many have described it as a carrot stick approach. Importantly, one major argument for the loan is that it will be used as an avenue to increase the present tuition fee paid by institutions. Already, some universities owned by the Federal Government have started announcing an increase in tuition fees. For instance, in December 2022 some Federal Government-owned universities announced a 200% hike in fees. It is highly probable that the increase in tuition fees observed in some public tertiary institutions will serve as a precedent for other institutions to follow suit. This is likely to be justified by the argument that students now have access to loans, which can be seen as a potential source for covering the increased costs.
Truthfully, the Nigerian educational sector is faced with loads of problems and payment of tuition is arguably not a low-hanging fruit. There are systemic issues that need to be addressed. Even with the availability of student loans, there are concerns about incessant strike action from unions like the Academic Staff Union of Universities and other related bodies, access to improved standards of teaching, an advanced curriculum, and adequate infrastructure, among other essential factors. Without addressing these issues, the core purpose of education may be compromised.
