#ThereIsABillinTheHouse that seeks to ensure easy access to tertiary education by providing interest-free loans to Nigerian students once certain conditions have been met. We look at the provisions in the Bill and its feasibility.
Issue-Brief | Rachel Ogidan
The Student Loan (Access to Higher Education) Bill (the "Bill") is currently before the National Assembly. It seeks to provide easy access to tertiary education for Nigeria by providing interest-free loans from the Nigerian Education Bank established pursuant to the Act.
Broadly, student loans are facilities designed to help students across tertiary institutions pay for their tuition, associated fees and living expenses. The financial cost of tertiary institutions varies across jurisdictions; nonetheless, it is generally more expensive than the primary and secondary levels of education.
Hence, this Bill is laudable, particularly in light of the widening poverty gap in Nigeria with more than 100 million Nigerians living below the poverty line. Nevertheless, the provisions of the Bill when juxtaposed with the already heavily subsidised cost of tertiary institutions in Nigeria raises a question as to the necessity and appropriateness of the law in our jurisdiction. In this issue brief, we have undertaken a review of the Bill, highlighted its benefits and other issues arising.
The Student Loan Bill
The Bill is applicable to all matters relating to the application and grant of student loan to persons seeking admission into higher institutions in Nigeria through the Nigerian Educational Bank. The Bill seeks to repeal the Nigerian Education Bank Act(Cap 104 LFN 2004). The Bill provides that access to the loans which are to be granted for the sole purpose of tuition fee payment subject to certain requirements and conditions as provided for under the Bill is to be free from any form of discrimination.
Additionally, the Bill seeks to establish Nigerian Education Bank (the "Bank") which is to be a body corporate with perpetual succession and a common seal with powers to sue and be sued. The functions of the Bank include, among other things, the supervision, coordination, administration and monitoring the management of student loans in Nigeria.
The Bank is to have a Governing Board charged with the responsibility of discharging its functions. Appointment of the chairman and members of the Governing Board is to be done by the President subject to the National Assembly's confirmation. This is especially relevant as the previous National Education Bank was wounded up notably due to the absence of an active governing board.
The Bill further establishes a Student's Loan Fund which consists of all interests arising from deposits in the Bank, education bonds, education endowment fund schemes, 1% of all taxes, levies and duties accruing to the Federal government from the Federal Inland Revenue Service, Nigerian Immigration Service and the Nigerian Customs Service, 1% of all profits accruing to the government of the Federation arising from oil and other minerals, all sums accruing to the fund by way of donations, gifts, grant, endowment or otherwise, interest and revenue accruing from savings and investments made by the Bank as well as other revenue accruing to the Bank from any other source.
The Bill stipulates conditions for students' eligibility to apply for the loan, including an income of less than N500, 000 per annum for such families. In addition, the Bill provides for categories of people disqualified from accessing loans, in a bid to guarantee the repayment of such loans. Loan applications are to be submitted through the student affairs office of each institution accompanied by a cover letter signed by the head of the institution and the student affairs officer and addressed to the chair of the board of the Bank.
The Bill states that repayment shall commence two years after the completion of the National Youth Service Corps programme and is to be a direct deduction of 10% of the beneficiaries' salary at source by the employer and credited to the students' loan account to be prescribed by the Bank.
Where the beneficiary is self-employed, the same is required to remit 10% of his total profit monthly to the student loan account. Self-employed beneficiaries are required to submit, within 60 days of assuming the status, all information relating to the business to the Bank. Failure to do so attracts an imprisonment term of two years or a fine of N500,000 (Five Hundred Thousand Naira) or both if convicted.
Feasibility of the Bill
The Bill appears to be a welcome development in light of the literacy rate in Nigeria, which was put 62.02% as of 2018 and the poverty ratio in Nigeria. However, its sustainability and the immediate need remain a grey area. The primary issue is unemployment/underemployment in Nigeria. As at the second quarter of 2020, Nigeria's unemployment rate stood at 27.1% indicating that about 21,764,614 (21.7 million) Nigerians remain unemployed. Nigeria's unemployment and underemployment rate (28.6%) is a combined 55.7%. This is worsened by the lack of job security in Nigeria. Accordingly, loan repayments may prove difficult, if not impossible, where the person is unable to secure a job.
Asides this, the quality of education raises fundamental questions as to the suitability of the individual of a post-graduate job. The Nigerian educational system is plagued with infrastructure deficit, and lack of proper facilities required in higher institutions amongst others. These problems have been numerously associated with the heavily subsidized tertiary education system in place.
It is, therefore, important to examine the feasibility of student loans in Nigeria. Recommendations have been made to increasing the cost of tuitions to address the infrastructure deficit, as well as the overall quality of education. Where this is implemented, the loan would thus become relevant, and not a mere statutory creation enabling fund siphoning.
Additionally, the brain drain, which is a major problem in Nigeria, ultimately raises further questions as to the enforceability of loan repayment, which has been in the past catastrophic to similar organizations.
This is part of our series on #ThereIsABillinTheHouse.
This issue brief was provided by
Rachel Ogidan | Research Assistant, Governance and Political Institutions | firstname.lastname@example.org
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