All You Need To Know About Nigeria’s New Student Loan Law

President Bola Tinubu on Monday signed into law a bill that provides interest-free education loans for Nigerians willing to acquire tertiary education.

The Access to Higher Education Act, 2023, otherwise known as students loan Act, establishes an Education Loan Fund to help Nigerians fund their higher education, while they pay in instalments two years after completing their participation in the National Youth Service Corps (NYSC) programme.

The bill, first introduced in 2016 by Femi Gbajabiamila, the immediate past Speaker of the House of Representatives, was reintroduced in 2019 and received more attention from the National Assembly in November 2022. It was barely a month after the end of an eight-month-long industrial action by the nation’s university workers’ union who had protested poor working conditions, among other demands.

Here are some key information about the Act:

Education Loan Fund

The Act establishes the Nigerian Education Loan Fund which is expected to handle all loan requests, grants, disbursement and recuperation of the loans provided.

The Fund, according to the Act, is to be funded from multiple streams and will engage in other productive activities.

Its sources of funding as dictated by the Act include; one per cent of all profits accruing to the federal government from oil and other minerals; one per cent of taxes, levies and duties accruing to the federal government from the Federal Inland Revenue Service (FIRS), Nigeria Immigration Service (NIS) and Nigerian Customs Service (NCS); education bonds and education endowment fund schemes.

The Education Loan will also be funded through donations, gifts, grants, endowment and revenue accruing to the fund from any other source.

Management, administration of the fund

The fund is to be domiciled in the Central Bank of Nigeria (CBN) and managed by an 11-person special committee chaired by the CBN governor, the law stipulates in Section 5.

The special committee consists of the CBN governor as chairperson and a secretary to be appointed by the chairperson.

Members of the committee as dictated by the law includes; the ministers responsible for education and finance, or the latter’s representatives, and the Auditor-General of the Federation.

Other members are; the Chairman, National Universities Commission (NUC), a representative of the forum of university vice-chancellors, a representative of the forum of polytechnic rectors and forum of provosts of all colleges of education in the country.

Also, a representative of the Nigeria Labour Congress (NLC), a representative of the Nigerian Bar Association (NBA), and a representative of the Academic Staff Union of Universities (ASUU), are also members.

This committee would decide the broad modalities including the process of application for the loan, who is qualified to get the loan and when they should pay back among other details.

“…the Committee shall establish regulations and guidelines for the management, administration, disbursement and recoupment of students’ loans under this Act, and all stakeholders including parents, students’ applicants, beneficiaries of the students’ loans and deposit banks shall comply with the regulations and guidelines,” Section 5(5) states.”

Section 5(2) of the Act also states that the fund “shall be domiciled with, managed and administered by the Central Bank of Nigeria through the money deposit banks in Nigeria for the purpose set out under section 6 of this Act,”

Meanwhile, the tenure of each member lasts through the time they hold their positions. As soon as they are replaced or retired, their successor takes their position in the special committee, Section 8 states.

A member also ceases to continue being a part of the committee when they become bankrupt, convicted of a felony or any offence involving dishonesty or fraud or becomes of unsound mind or is incapable for any reason of discharging their duties.

Who Can Apply?

Sections 14 and 16 of the Act explained eligible applicants and the procedures of submitting applications to the selection committees.

According to the Act, only students of government-owned tertiary institutions can apply for the loan when it finally takes off.

“Subject to the provisions of any other enactment, all students seeking higher education in any public institution of higher learning in Nigeria shall have an equal right to access the loans under this Act without any discrimination arising from gender, religion, tribe, position or disability of any kind,” Section 2 states.

Section 23 of the Act further clarifies that “institutions of higher learning” means public universities, polytechnics, colleges of education and vocational schools established by the government.

Also, to be eligible, an applicant’s income or family income must be less than N500,000 per annum.

Students must also provide at least two guarantors, each of whom must either be a civil servant of at least level 12, a lawyer with at least 10 years post-call experience, or a judicial officer, or a justice of peace.

Also, Section 15 of that act states that a student will be disqualified from taking the loan if they have been found guilty of examination malpractice by any school authority, or convicted of a felony or any offence involving dishonesty or fraud.

An applicant will also be disqualified if they or their parents have defaulted in respect of a student loan or any loan granted to the person, or has been convicted of drug offences.

Repayment Plan

The Act did not put a cap on the amount students can access or within a period of which they must conclude repayment.

It, however, states that the repayment of the loan begins exactly two years after the completion of the participation in the NYSC programme.

A beneficiary shall remit 10 per cent of their income to the Fund at the end of every month. For self-employed individuals, 10 per cent of their total monthly profit shall be remitted as part of the repayment plans.

Meanwhile, defaulters risk a N500,000 fine, two years jail term or both when they fail to repay their loans.

Mode Of Application

The Act also stipulates the mode of application.

To apply for the education loan, candidates are required to submit applications to the chairperson of the CBN-governor-headed committee through their respective banks.

The application is to be accompanied by a cover letter signed by the head of their institutions (vice-chancellors for university students, rector for polytechnic students and provost for students of colleges of education) and students affairs officer of the institution.

Students also submit a copy of their admission letter, at least two guarantor letters addressed to the chairperson of the committee, two passport photographs from each of the guarantors, their employer and evidence of employment. In cases where the guarantor is self-employed, their business registration with the Corporate Affairs Commission (CAC) or any other appropriate authority and their bankers, will be required.

“The Committee shall communicate to the applicant on the status of his application within 14 days of the receipt of any application,” the act states, adding that “disbursement shall be on the availability of funds.”

Source: Premium Times

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