President Bola Tinubu on Wednesday, April 3, signed the Students Loans (Access to Higher Education) Act (Repeal and Re-Enactment) Bill, 2024 into law. In a letter dated March 14, 2024, President Bola Tinubu transmitted the bill to the National Assembly. The purpose of the bill was to address the challenges related to the management structure of the Nigerian Education Loan Fund, applicant eligibility requirements, loan purpose, funding sources and disbursement and repayment procedures. Both chambers of the National Assembly passed the bill on March 20, 2024.
It will be recalled that the now repealed Student Loan Act came into force on June 12, 2023 after it was assented to by President Tinubu. It was targeted at providing interest-free loans for Nigerian students who met certain conditions stipulated in the Act. However, the student loan scheme did not take off on any of the dates that the Federal Government had stated.
PLAC had provided a summary and analysis of some provisions of the repealed 2023 Act in a previous edition of LEGIST.
The re-enacted Students Loans Act 2024 which originated as an Executive bill expunges certain provisions and introduces some new provisions, different from what was contained in the now repealed Students Loans Act 2023.
The Students Loans Act 2024 expands the eligibility of those who can apply for student loans to all Nigerian students admitted into Federal and State government tertiary education institutions and vocational or skills acquisition institutions licensed by the Federal Government, and eliminates the requirement for an applicant or their family to have an annual income of less than N500,000 as required in the repealed Act. It also expands the purpose of the loan from only tuition, to include other fees payable to educational institutions and upkeep for the student. Furthermore, it expunges the requirement for an applicant to have two guarantors who must be either a civil servant of at least a level 12, a lawyer of at least 10-years post-call experience, a judicial officer or Justice of Peace.
The Act establishes the Nigerian Education Loan Fund (NELFUND) as a corporate entity, which is responsible for the administration of student loans. It replaces the Executive Secretary of the Fund with a Managing Director, to be appointed by the President and supported by three Executive Directors with 5-year tenures. It also establishes a Board of Directors for the Fund, to be headed by a non-executive Chairman. The Act further empowers the Board of the Fund to make specific regulations regarding the process of loan applications and the criteria for granting loans in each financial year. It removes the administration of the Fund from the Central Bank of Nigeria.
The Act retains 1% of all taxes, levies and duties collected by the Federal Inland Revenue Services (FIRS) as a source of funding for NELFUND and deletes the 1% of taxes, levies and dues accruing to the Nigeria Immigration Service and Nigeria Customs Service as a source of funding. Furthermore, it establishes a General Reserve Fund and stipulates National Assembly appropriation, investment income, charges and fees by NELFUND and repayment of interest on loans as some sources of funding. The mention of interest on loans as a source of funding implies that the student loans will not be interest-free as provided by the 2023 Act.
The new Act removes the provision which disqualified the children of persons who have defaulted on any loans from applying for student loans in the repealed 2023 Act. This means that an applicant whose parents defaulted on a previous loan can still apply for a student loan. However, the Act disqualifies beneficiaries of any loan or scholarship scheme of the Federal Government or any of its agencies from applying for student loans.
The 2024 Act maintains that loan recovery efforts are to be initiated two years after a recipient of a student loan completes the National Youth Service Corps (NYSC) programme. However, it provides that a recipient of a student loan may request an extension of enforcement by providing an affidavit to the effect that he or she is unemployed and is not receiving any income. Also, while the repealed Students Loans Act 2023 criminalised failure to repay loans, the 2024 Act provides that loan repayment may be waived in the event of death, cases of hardship, reasons of equity where it is impossible to recover the loan amount or where the cost of recovery exceeds the amount being sought.
The 2024 Act places a duty on employers to find out from the Fund, the student loan status of persons they employ. Employers found guilty of contravening this provision are punishable by a fine of not less than two million naira and or an imprisonment term of not less than one year.
Employers are mandated to provide the Fund with necessary information of their employees who are beneficiaries of the student loans and are yet to complete their repayment, to enable the Fund initiate repayment of the loan and any charges from such persons.
The new Students Loans Act 2024 when implemented, can potentially grant more Nigerians access to tertiary and vocational education, particularly those from low-income backgrounds. The expansion of the coverage of the loans to include other charges and upkeep for students is commendable.
The removal of a limit on annual personal/family income as an eligibility criterion is likely to translate to a larger pool of student loan applicants vying for loans from limited resources. Also, the exemptions from loan repayment while providing some flexibility raise concern of abuse by student loan beneficiaries, as this may result in the Fund being unable to recover some loans paid out to beneficiaries. The Board of the Fund which is ultimately responsible for making specific regulations with regard to the eligibility criteria that will guide the application process may want to consider these factors and streamline the category of persons who can apply for student loans on the basis of financial need, academic merit, or any other basis it deems fit in order to have a more manageable pool of beneficiaries.
The moratorium period of two years before repayment of the loan commences should be extended in the light of the high unemployment rate in Nigeria, which means that on average, it can take graduates more than two years to secure employment after completing their National Youth Service Corps (NYSC) programme.
Overall, the Students Loans Act 2024 is a welcome development that has the capacity to aid Nigerians to achieve their educational aspirations.