{"id":3285,"date":"2023-06-30T15:45:36","date_gmt":"2023-06-30T15:45:36","guid":{"rendered":"https:\/\/placng.org\/Legist\/?p=3285"},"modified":"2023-06-30T16:28:19","modified_gmt":"2023-06-30T16:28:19","slug":"students-loans-act-improved-access-to-education-or-a-mirage","status":"publish","type":"post","link":"https:\/\/placng.org\/Legist\/students-loans-act-improved-access-to-education-or-a-mirage\/","title":{"rendered":"Students\u2019 Loans Act \u2013 Improved Access to Education or a Mirage?"},"content":{"rendered":"\n

The Students\u2019 Loans (Access to Higher Education) Act, 2023, gained Presidential assent on 12th<\/sup> June 2023 and has since been making the rounds in the media and among Nigerians. The Act repeals the Nigerian Education Bank Act, Laws of the Federation of Nigeria, 2004. <\/p>\n\n\n\n

It\nprovides the framework for equal access to interest-free loans for all students\nseeking to study in public institutions of higher learning in Nigeria, for the\npayment of tuition fees only. To secure a loan an applicant must:<\/p>\n\n\n\n

  1. Have\nadmission to a university, polytechnic, college of education or vocational\nschool established by the Federal Government or a State Government; <\/li>
  2. Have\nannual personal or family income of less than N500,000; <\/li>
  3. Provide\nat least two guarantors who must be a civil servant of level 12 at least, a\nlawyer with at least 10 years post-call experience, a judicial officer or a\njustice of peace. <\/li><\/ol>\n\n\n\n

    A\nstudent is disqualified from accessing the loan if he or she:<\/p>\n\n\n\n

    1. Has\ndefaulted in repayment of a loan from any organisation; <\/li>
    2. Is\nfound guilty of exam malpractice by any school authority; <\/li>
    3. Has\nbeen convicted of a felony or offence relating to dishonesty or fraud; <\/li>
    4. Has\nbeen convicted of drug offences; <\/li>
    5. Has\na parent who has defaulted in respect of a student loan or any other loan. <\/li><\/ol>\n\n\n\n

      The\nAct establishes the Nigerian Education Loan Fund which will be responsible for managing\nstudent loans, making rules and guidelines with respect to the loan application\nprocess, reviewing loan applications, approving and disbursing same, recovering\nall loans, among other functions. The Fund will also monitor the academic\nrecords of loan grantees and obtain information about their graduation,\nnational youth service and employment, to determine when repayment of each loan\nis due. The Fund will work with employers to ensure that the loan sum is\ndeducted from the salaries of the grantees. <\/p>\n\n\n\n

      The\nFund will be administered by the Central Bank of Nigeria through Nigerian money\ndeposit banks. The CBN Governor is responsible for setting up and chairing a\nSpecial Committee which will perform the functions of the Fund. The CBN\nGovernor is also empowered to appoint a Secretary for the Committee. The\nCommittee comprises several stakeholders from the education sector, the Finance\nMinister, Auditor General for the Federation and representatives from the  Nigeria Labour Congress (NLC) and the\nNigerian Bar Association (NBA).<\/p>\n\n\n\n

      Nigerian\nEducation Loan Fund will be financed through education bonds, education\nendowment fund schemes, 1% of taxes, dues and levies accruing to the Federal\nInland Revenue Service (FIRS), the Nigeria Immigration Service and the Nigeria\nCustoms Service; 1% of  profits from oil\nand other materials; gifts, donations and grants. <\/p>\n\n\n\n

      An\napplication for student loan is to be submitted through the applicant\u2019s bank to\nthe Chairman of the Special Committee (for the Nigeria Education Loan Fund),\nthat is the CBN Governor. The application must be accompanied by a letter\nsigned by the Vice Chancellor or Rector or the head of the applicant\u2019s\neducational institution, as well as the Student Affairs Officer of the\ninstitution. The application must also be accompanied by a copy of the\nstudent\u2019s admission letter, a letter from their guarantors recommending the\napplicant for the loan and accepting liability in the event of a default in the\nrepayment of the loan. In addition, the application will also contain the\nparticulars of a guarantor\u2019s business registration with the Corporate Affairs\nCommission (CAC) or documentation from an appropriate authority and details of\nthe guarantor\u2019s bankers. <\/p>\n\n\n\n

      It\nis important to note that disbursement of funds where a loan is approved is\nsubject to availability of funds. <\/p>\n\n\n\n

      According\nto the Act, repayment of the loan will commence two years after the beneficiary\nhas completed the National Youth Service Corps (NYSC) programme. Ten per cent\n(10%) of the beneficiary\u2019s salary will be deducted at source by his or her\nemployer, who will credit the Fund with these deductions. A beneficiary of a\nstudent loan is also required to communicate any change of job (with details of\nthe new job) to the Chairman of the Committee within 30 days of resuming with a\nnew employer.<\/p>\n\n\n\n

      Where\nthe beneficiary is self-employed, he or she is expected to remit 10% of his or\nher total profit on a monthly basis, to the Fund. A self-employed beneficiary\nmust submit information relating to his or her business, including registration\ndocuments (if registered), details of bankers, partners, directors and\nshareholders, to the Committee within 60 days of assuming that status. It is an\noffence for a self-employed beneficiary or another person to withhold\ninformation of such a beneficiary as it relates to his or her business and this\noffence is punishable by a fine of N500,000 or imprisonment for two years or\nboth. <\/p>\n\n\n\n

      The\nAct makes other provisions for the operations and internal affairs of the\nSpecial Committee established by it. <\/p>\n\n\n\n

      The\nprovision of interest-free student loans to improve access to tertiary\neducation is a laudable initiative. However, the conditions for obtaining\nstudent loans need to be realistic, to ensure that these loans are actually\nobtained by the target beneficiaries. The requirement for two guarantors who\nwill become liable in the event of a loan default does not appear practical, as\npeople would be reluctant to serve as guarantors for applicants, thereby making\nit difficult for applicants to fulfill the conditions for accessing these loans.\nIn terms of systems and processes, a credible identity database is necessary\nfor loan operations, to effectively track loan recipients and ensure repayment\nof loans. Improving the integrity of Nigeria\u2019s national identity system, as\nwell as improved synergy between government institutions using a unified\ndatabase will be instrumental to following up on loan repayment, as opposed to\ntransferring the burden to guarantors in the event of a default. <\/p>\n\n\n\n

      It\nwould appear also, that the threshold of qualification to access the loan means\nthat several other needy students are excluded. A maximum income cut-off of\nN500,000 per annum really means that the several millions of poor families that\nfall outside of this threshold will not benefit. <\/p>\n\n\n\n

      It\nis also important to point out that there is no amount stated as payable as\ntuition under this law. It appears that this may have a positive effect as it\nwould enable adjustment in line with possible future increases in tuition fees.\n<\/p>\n\n\n\n

      The\nassumption that a Nigerian graduate would have secured a job within two years\nof completing the NYSC programme is questionable. The unemployment rate in\nNigeria is staggering and has been estimated by experts to be as high as 40.6%\nin 2023. There may be a need to provide variable timelines, so that if the\ncircumstance of a beneficiary makes it difficult for him or her to pay, the\ntimeline can be adjusted to take this into account. <\/p>\n\n\n\n

      Another\nobservation is that the Act does not explicitly state the frequency of the 10%\ndeduction of an employed loan beneficiary\u2019s salary for the repayment of the\nloan, although it may be assumed that it should be monthly, as stipulated in\nthe case of a self-employed beneficiary. <\/p>\n\n\n\n

      It is also unclear why the management of the Fund is domiciled with the Central Bank, as it is not part of its core responsibilities of nor is there any justification made for this. <\/p>\n\n\n\n

      Read Act here https:\/\/shorturl.at\/jkpJX<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

      The Students\u2019 Loans (Access to Higher Education) Act, 2023, gained Presidential assent on 12th June 2023 and has since been making the rounds in the media and among Nigerians. The Act repeals the Nigerian Education Bank Act, Laws of the Federation of Nigeria, 2004. It provides the framework for equal access to interest-free loans for […]<\/p>\n","protected":false},"author":2,"featured_media":3289,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-3285","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/3285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/comments?post=3285"}],"version-history":[{"count":2,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/3285\/revisions"}],"predecessor-version":[{"id":3293,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/3285\/revisions\/3293"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/media\/3289"}],"wp:attachment":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/media?parent=3285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/categories?post=3285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/tags?post=3285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}