Is Student Loan a Blessing or Trap for Nigerian Students?

The decision to pursue higher education for an average secondary school graduate has always required a lot of thought.

This is because asides from tuition, other fees and payments go into acquiring higher education. These include buying books, the cost of accommodation, and payments of extra fees such as departmental registration fees and others.

Many have thus wondered and said to themselves: “it would be nice if the government has a provision for student loans in Nigeria like there is in developed countries. It would make life easier for me, at least my tuition will be out of the way.”

For some, it was wishful thinking. So, it must have come as a shock and good news to many, especially those that find the cost of living very hard, when they heard on June 12, 2023, or afterward that the President of the Federal Republic of Nigeria signed a bill into law re-introducing student loans in Nigeria.

However, unlike many think it is, student loans are not new in Nigeria. First, when was the first official occurrence of student loans?

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Student Loans: The Past

In 1974, General Yakubu Gowon established a student loan board that made student loans available. However, out of the 46 million naira disbursed to students, only about 6 million naira has been paid. In essence, the student loan arrangement then was unsuccessful.

Therefore, it is understandable that the federal government student loan has some eligibility criteria and reasons for disqualification.The government of the day most likely does not want a repeat of the past incident.

However, the criteria to get a student loan has caused concerns rather than serve as a ray of hope for many who thought that providing student loans would be a way out for them to pursue higher education in Nigeria.

What Makes a Person Eligible For a Student Loan?

While the provision of the federal government loan seems like it was made to ease the education burden of many. Such as those who had to drop out of school or take leaves of absence to source for tuition, amongst other necessary fees, or those who have had to deal with unstable mental health conditions because they could not graduate with their peers, the criteria to getting the student loan when looked at carefully can be too much for many to bear.

Some of them are:

Applicants must be admitted into a Nigerian University, Polytechnic, college of education, or vocational school established by the federal government.
The applicant’s family income must be less than five hundred thousand naira per year.
There has to be at least two guarantors, and each guarantor must either be a civil servant of not less than level 12 in service, a lawyer with at least ten(10) years experience after their call to bar, a judicial service, or a justice of the peace.

Read also: 10 Wildest Things Nigerian Students Have Done in the University.

What Disqualifies a Person From Getting a Student Loan?

Aside from these eligibility criteria, certain things or conditions disqualify a person from getting access to the federal government loan. The conditions for disqualifications are as follows;

If the student has defaulted or failed to pay a previous loan by a recognized organization
If the student has been found guilty of exam malpractice by any school authority
If the student has been convicted previously of any offense involving dishonesty or fraud
If the student has been convicted of offenses involving drugs
If the student’s parent had defaulted regarding any loan granted to the student’s parent.

These qualifications may look like they are just ordinary, but considering them closely, it is clear that it will be difficult for some to access the student loan.

Asides from these qualifications, there is something else that might make it difficult for many to apply for the provision of student loans in Nigeria: repaying the student loan. Getting a loan is one thing; paying back is another.

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What Provisions Are Made for Repaying the Student Loan in Nigeria?

It is true that when it comes to repaying the federal government education loan, a reasonable amount of consideration must have been put into it. When and how will the student loan be repaid?

When it comes to the time for repayment, it has to start two years after the student applicant has completed his or her National Youth Service Corps.

For the method of repayment, the loan will be removed instalmentally. This means the loan will be repaid at intervals rather than once. The loan will be removed from the applicant’s salary if an employer employs him or her. This removal will be a percentage of the applicant’s salary, ten percent to be precise, and transferred to the student loan account.

Should the applicant be self-employed, he or she must submit his or her business’s important information, such as the business’s name, address, and important documents and affiliations to the business. This implies that the business must be a registered one. All this important information must be submitted within sixty days of starting the business.

This will make it easier for the board responsible for student loans to track such repayment and prevent loopholes in the payment process. Like an individual with an employer, ten percent of the applicant’s monthly profit will be transferred to the student loan account.

Are There Consequences for Defaulting in Repaying the Student Loan?

Yes, there are!

Once a person does not repay the student loan at the right time, the person will be considered an offender of the law. If a person is found guilty of failing to repay a student loan in Nigeria, the consequence is imprisonment for two years or a fine of five hundred thousand naira or both.

Is every fund that will be pumped into student loans directly from the federal government? Is it from the budget allocated to education? Are there other sources from which the loan is coming from?

Sources of the Students’ Loan Fund

It is no news that the government cannot completely fund tertiary institutions. It is also no news that; of the total budget allocation every year, the amount that goes into education has always been close to insignificant compared to the need of the workers of these tertiary institutions and the state of these tertiary institutions.

Over the years, this has led to incessant strikes, poor laboratories, facilities, and a lackadaisical attitude of workers to work. This has also produced graduates with inadequate knowledge and understanding of their respective fields.

It is impossible to think the federal government will fund everything related to student loans. The source of funds includes, amongst others;

All interests arising from deposits in the bank.
Education taxes
1% of all taxes, levels, and duties going to the federal government from the FIRS
1% of all profits going to the federal government arising from oil and other minerals
Grants, gifts, and other endorsements

Read also: 10 Nigerian Scholarship Opportunities Every Nigerian Student Should Know.

How Can an Applicant Get The Education Loan?

The following are the requirements to be submitted to get a student loan:

Applicants must submit an application to their institution’s students affairs office.
Each application must be accompanied by a cover letter signed by the head of the institution and the students’ affair officer. The cover letter must be addressed to the Chairman of the board of the bank.
Each application must be accompanied by the student’s admission letter and letters from the guarantors that recommend the applicant for the loan addressed to the Chairman of the board of the bank.
Two passport photographs and evidence of employment of each guarantor must be included.

It is important for qualified applicants to submit applications quickly because all applications must get to the bank responsible for the student loans before admission closes for the academic year.

What Makes the Student Loan a Good Provision?

The provision of student loans in Nigeria is beneficial for several reasons. In a country where many things, jobs, and opportunities are obtained through connections, the student loan initiative does not discriminate against a person’s background, gender, social status, religion, etc.

The student loan is also a good provision because, unlike many other loans, there are no interests on the federal government education loan.

Through the student loan provision, the budget allocated to education in Nigeria each year will be aimed at training lecturers and caring for their welfare. But is there anything that makes the system of student loans in Nigeria a cause of concern?

Are There Concerns When it Comes to the Federal Government Education Loan?

Yes, there are some concerns. There are questions to be asked, thoughts that come to mind, things that can draw people back from applying for this student loan, and factors that can even further reduce the rate of pursuit of tertiary education in Nigeria.

Some questions to think about after carefully considering the qualification criteria and reasons for possible disqualifications and ineligibility are:

Even though an applicant has two years to start payment after his or her National Youth Service Corps Program, what is the assurance that there will be jobs available for applicants of this loan two years after NYSC?
Do we have a database as a country that will track how the applicants of the student loan will use the loan they are given, making sure that students do not use the loan in a way that should not be?
Considering the possible increment in school fees, will it not be a burden on the parts of possible applicants and their parents to think of repaying student loans for years or even decades when other bills and payments will arise after starting to work?
Besides tuition, which is the only fee the loan will cater for, how will a student that cannot afford to feed himself or get accommodation at school because of the increase in the cost of renting places to live be able to concentrate on gaining knowledge and acquiring skills?
How will underprivileged students be able to cater for other academically related issues and fees, such as getting textbooks, buying materials and handouts, etc, since the loan is strictly for tuition?
Is there a way or method that the government plans to track the family annual income of the parents of applicants, especially in families without civil servants or salary workers?
For a family to collectively earn less than 500,000 in a year, it means that the total income in a month for the family is about 42,000. The present minimum wage is 30,000. In a family consisting of both husband and wife earning just the minimum wage giving a combined monthly income of 60,000 and annual income of 720,000, the student is not eligible for a student loan, despite the parent’s earnings being very little in comparison to the economic situation of the country. Does this not imply that applying for student loans with these eligibility criteria will be impossible for many who need it and should get it?
There are more chances than not that a family earning a collective amount of 500,000 in a year will not be able to find two persons that have at least attained a level 12 in civil service or have been a lawyer for ten years that will stand for them as guarantors for their child’s loans. How will a student be able to apply without having persons that will fulfill this criteria?
Why does an applicant have to forgo access to the provision for a student loan because his or her parents defaulted on a loan that was not his or her fault?

Read also: Getting a part-time loan as a Nigerian Student.