Put the Student before the Loan

In a video from the 2015 presidential election campaign, President Tinubu declared that ‘we will give student loans and for our (school) programmes, four years will be four years.’ He also repeated this during the build-up to the 2023 Presidential election. To be fair to him, he effectively signed the bill within the first two weeks of his administration. Shortly after the bill was signed into law, the Ministry of Education announced that the Federal Government ‘can no longer foot the bills for universities,’ a move representing the beginning of the end of tertiary educational subsidies in the country.

One of the earliest introductions of the concept of a national student loan scheme as we know it today emerged in Colombia in 1951 and it is still in operation. In 1958, the United States government passed the National Defense Education Act (NDEA), which provided low-interest loans for students in fields like sciences, engineering, and teaching. The NDEA loan programme evolved to become the Federal Direct loan programme, which allowed students to borrow directly from the US Department of Education. However, in America, the US loan system has been widely criticized as ‘evil’ and ‘horrible’ over the years due to prolonged struggles to repay the loans. As of January 2021, around 45 million Americans were in student loan debt with the total loan debt amount valued at around $1.8 trillion. According to a study conducted by  Research.com, today, the average university-educated American spends about 10-30 years post-graduation paying student loans. This has led to the emigration of young Americans to Europe in search of cheap tuition.

On the African continent, the student loan scheme was introduced in Ghana in 1971 but was abolished the following year as a result of a change in ​government following the January 1972 coup d’état, which ousted the democratically elected government of Dr Kofi Busia. Nigeria also launched its student loan scheme in 1972 with Decree No. 25 of General Yakubu Gowon’s regime establishing the students’ loan board. The board provided loans amounting to N46 million between 1973 and 1991 but had various challenges, especially regarding the recovery of loans with over N40 million ​still yet to be repaid as of today. This led to the promulgation of a new decree, Decree No. 12 1988, which aimed to decentralize the process of awarding and recovering loans through the creation of regional offices. The students’ loan board was replaced by the National Education Bank (EDUBANK) following the promulgation of Decree 50 of 1993. Like many other projects that have been announced over the years in Nigeria, the EDUBANK project did not see the light of the day.

The ​2022 Student Loan Act was sponsored by Hon. Femi Gbajabiamila, the immediate past speaker of the House of Representatives and the current chief of staff to the president. According to ​​official documents, it aims to ​‘provide easy access to higher education for indigent Nigerians through interest-free loans from the Nigerian Education Loan Fund established through the act’. (See more details on the Student Loan Act ​​here).

The eligibility conditions for students applying for the loans include a family income of less than N500,000 per annum, proof of admission into any of the public tertiary institutions in the country, and provision of at least two guarantors. According to the Act, each guarantor shall ‘be a civil servant of at least level 12, a lawyer with at least ten years of post-call experience, a judicial officer, or a justice of peace.’ A student can be disqualified from applying for the loan if they have been convicted of a felony or offences relating to fraud or drug or if the student/their parents are proven to have defaulted in respect to any previous loan from an organization or the government.

The Student Loan Act provides access to education for more students through interest-free loans and financial flexibility it offers. Despite this, one major flaw of the act is that it does not reflect the reality of the average Nigerian. Ironically, most of the eligibility conditions disqualify the target population, poor Nigerians, from accessing the loan. First, the combined annual family income requirement of less than N500,000 means that only students from families earning less than N42,000 monthly can apply. Assuming a two-parent household and that both parents earn some form of income, each parent must earn less than N21,000 monthly for their children to qualify. This requirement sounds paradoxical in a country where the minimum wage is N30,000—this implies that many families are technically not eligible to apply for the student loan.