President Bola Tinubu fulfilled one of his election promises on Monday, June 12, by signing the student loan bill into law. The new law aims to provide interest-free loans to financially disadvantaged Nigerian students during their educational journey.
Sponsored by Femi Gbajabiamila, the former Speaker of the House of Representatives and incoming chief of staff to the president, the bill specifically targets students enrolled in federal or state government-owned universities, polytechnics, and colleges of education.
Although the National Assembly passed the bill in November 2022, the former President Muhammadu Buhari did not sign it into law for reasons unknown.
While many have praised the idea, some doubt the effectiveness of the bill in resolving issues within the country’s education sector. Certain provisions of the new law have drawn criticism from lecturers, who argue that the loan repayment method is not feasible.
Breaking News: Tinubu Enacts Student Loan Bill
The new law is expected to have a significant impact on the education system in the country. However, there is still uncertainty surrounding its implementation, including how to access the loan, repayment methods, and other guidelines.
Here are five key points to know about the controversial bill:
- The bill establishes the Nigerian Education Bank, a financial institution dedicated to granting loans to financially disadvantaged students. These loans will be recovered at a zero-interest rate. The bank will secure funds from education bonds, education endowment funds, and one percent of national tax derivations from the Federal Inland Revenue Service (FIRS), the Nigerian Immigration Service, and the Nigerian Customs Service (NCS). Additionally, one percent of profits from oil and minerals will contribute to the funding.
The bill outlines that the regulatory institution will monitor the academic progress of loan beneficiaries. Moreover, the bank will track the progress of beneficiaries in entering the labor market to ensure loan repayment.
- Loan repayment begins two years after the beneficiary completes their National Youth Service (NYSC). The repayment process involves a direct deduction of 10 percent from the beneficiary’s salary, as stated in the bill.
- The bill specifies that a professor and a retired vice chancellor, among other governing board members, will chair the education bank.
- The bill sets conditions and requirements for loan applications. The loan can only be used for tuition payments. Interested students must submit their loan applications through their respective institutions, but the applications must meet the conditions outlined in the bill to be considered successful.
One condition states that applicants must come from families with an annual income of less than N500,000. Additionally, applicants must provide two guarantors.
- The bill also includes grounds for disqualification from the loan. Students who have previously defaulted on loan repayments or have been found guilty of examination malpractice will be denied access to the loan.
The bill also excludes individuals with a history of drug convictions or convictions for felony, dishonesty, and related offenses. Furthermore, applicants whose parents have defaulted on any loan repayment will not be eligible. The bill imposes a fine of N500,000, a two-year prison sentence, or both for any defaulter upon conviction.
On Wednesday, the Ministry of Education’s permanent secretary, Andrew David Adejo, announced that the loan facility would commence in September/October 2023. Adejo emphasized the president’s directive to see loan recipients by the 2023/2024 academic session, indicating the seriousness of the matter. The ministry will work on the loan application process before that time, as stated during a press conference in Abuja on Wednesday.