On 3rd April 2024, President Tinubu signed the Student Loan Amendment and Re-enactment bill into law. This came after the president had earlier signed the old bill into law on 12th June 2023.
The nine-month gap between the old law and the new law tells us a lot about our policymakers’ approach to governance.
In summary, President Tinubu was presented with a bill 13 days into his presidency and decided to sign it into law. It was after signing the law that the administration realized it was practically impossible to implement the student loan due to some provisions in the law.
Now that the reenactment law has been signed, what should Nigerian students expect from the student loan fund?
Things to Expect from the Student Loan
The government will establish an agency which will be called the National Education Loan Fund (NELFUND). This agency will be headed by a Managing Director to be appointed by the president. The agency will be in charge of all the student loans in the country.
Funds for student loans will be generated from 1% of all taxes, levies, and duties collected by the Federal Inland Revenue Service. This means the Fund will have almost 100 billion Naira to spend every year. Other sources of money for the fund will be through appropriation by the National Assembly, grants, gifts, endowments, and the sale of assets. As it is, the Student Loan Fund has about 55 billion Naira already voted for in the 2024 budget.
In this new law, there is no restriction as to who can apply for the loan and who cannot. The first version of the law only limits it to the poorest of the poor. But in this new law, all students can apply for the loan regardless of their economic status. No private university students can apply for the loan.
This means a secondary school graduate cannot directly apply for the student loan until he has been successfully admitted to a course of study by a public higher institution. Therefore, the Joint Admission and Matriculation Board(JAMB) will play a crucial role in synergizing the student loan. This is because it is JAMB that gives admission to students.
Unfortunately, it is observed that JAMB is absent among the agencies that are penciled to have representation on the board of NELFUND. Other agencies such as NIMC, FIRS, NUC, and NBTE are all members. This can be problematic for the smooth synergy of implementing the student loan unless it is rectified.
Nigerian students should also note that, according to the new law, applicants are entitled to getting feedback on their application no later than 30 days after applying to the Fund for a loan. This is a very important provision in the law because it will enable transparency and swift response to applicants.
Also, not only university students are eligible to apply for the student loan. Students of Polytechnics, Colleges of Education, Monotechnics, Vocational and Skills Acquisition Schools are all welcome to apply. This is important because Nigeria needs not only university graduates but also technicians. And teachers who will provide the needed workforce for our schools and industries. The trick, however, is how the NELFUND will share allocations for loans to these categories of schools. Which will take the highest shares and why? It will be advisable to give more emphasis on professional courses and the courses that have higher relevance for national development.
Unlike the old law, where students are eligible for loans to pay tuition fees only, this law allows students to obtain a loan for their upkeep as well. This is a very important provision because many students struggle with upkeep funds during their studies. The law did not clarify the minimum amount to be given to students as a loan for upkeep.. But it is expected that at least 50% of the national minimum wage should be paid.
Nigerian students can also now apply for the student loan without the need for a guarantor. In the old law, applicants are required to present a guarantor who is a senior civil servant or a registered lawyer with more than 10 years of post-call experience. This restriction has now been completely lifted for Nigerian students.
In terms of repayment of the loans, beneficiaries are expected to begin repayment two years after NYSC service. For those who are exempted from NYSC, the two-year window also applies. If a beneficiary of the student loan is still unemployed two years after NYSC, he can write to the NELFUND for an extension and swear an affidavit to that effect.
Additionally, in extreme cases where a beneficiary proves incapable of repaying the loan, the NELFUND can, at its own discretion, waive the loan. Also, in case of death, the NELFUND will not institute a recovery process for the loan. As enshrined in section 2 subsection 3 of the student loan law.
This decision to waive the loan of any beneficiary in case of death comes as a huge relief for the next of kin of beneficiaries. This will ensure that no one will be left with the burden of his relative who obtained the loan in case of death.
However, all potential loopholes that will enable beneficiaries to evade repayment have to be blocked. Some persons can go to the end of faking their deaths just to avoid repaying the loan. The NELFUND has to put stringent measures to ensure this does not occur.
On the part of employers of labor, the student law requires them to verify the status of their prospective employees with the NELFUND before an offer of a job. If an employee is a beneficiary of the student loan, the employer is mandated to collaborate with the NELFUND to institute a repayment procedure. This repayment should not be more than 10% of the person’s monthly income.
What this means is that a new certificate of student loan verification may be issued to graduates in the near future. The certificate will show those who obtained their education on loan from those who did not. And this certificate will become as important as the NYSC certificate in the labor market.
There is a strict penalty on employers of labor who connive with beneficiaries of the student loan to evade. Violators are liable to two million naira in fine and or imprisonment.
For beneficiaries of the student loan who are unemployed after graduation, but engage in businesses that generate them some monthly income, they are also mandated to key into the repayment plan.
For the loan repayment to be effective, stronger information management systems need to be put in place. This is in line with section 23 subsection 2 of the law which empowers the NELFUND to obtain personal information, biometric details and other unique details of all applicants for the student loan. This is where the National Identity Management Commission and Bank Verification Numbers will play crucial roles.
The student loan law empowers the NELFUND to engage the services of consultants and service providers to discharge duties on behalf of the fund. This will be likely utilized to engage the service of consultants who will aggressively pursue the recovery of loans without fear or favor. Already, many aspects of Nigeria’s revenue generation are being outsourced to provide consultants for higher transparency and professionalism. The NELFUND will likely be no different in this regard.
Will the NELF be another juicy agency that Nigerians will be dreaming of getting employed in? Will it become like NPA, CBN, NNPC, and the like? The answer can be found in the law which allows the NELFUND to pool its staff from CBN and other federal ministries on secondment. This is a pointer that the salary package of the NELF will be fairly modest and many Nigerians will have their eyes on it.
There will be concerns as to how the Funds will be judiciously spent. Nigerians will expect the loans to be shared to students from all geopolitical zones on an equal basis without giving preference to one region over the other. The Federal Character Commission (FCC) has a role to play in ensuring this is achieved. The absence of FCC in the FUND’s board raises concerns as to how the FUND can achieve equal distribution.
Also, Nigerians will be interested in knowing how the NELFUND’s activities will not be enmeshed in corruption controversies. There is a need for more transparency in publishing the number of people benefitting from the loan. And how much is distributed yearly. The law mandates the law to submit an audited account of its financial statements to the president and national assembly. The FUND should therefore ensure that such audited statements are also made publicly available to Nigerians.
Conclusion
The student loan has taken too long to launch and Nigerian students are very eager to start receiving it as tuition fees of public institutions have already been hiked. This essay has provided a detailed analysis of the student loan law and made recommendations on how to make it better. It is noted that the loan is far from perfect but it is good for a start. Lessons from the pilot phase of the loan implementation should inform further review of the loan.
