Here’s all you need to know about student loan bill and how it affects Nigerians

President Bola Tinubu, on Monday, June 12, 2023, signed into law the Student Loan Act, the third bill he will be signing into law since he was sworn in as Nigeria’s 16th President, on May 29, 2023.

Sponsored in 2022 by Femi Gbajabiamila, the former Speaker of the House of Representatives, who is expected to resume duties as Tinubu’s chief of staff on June 14, 2023, after being appointed by the President, the bill seeks to provide loans for Nigerians seeking to further their education in any of Nigeria’s tertiary institutions.

According to United Nations International Children’s Emergency Fund (UNICEF), Nigeria has one of the highest numbers of out-of-school children in the world with 18.5 million as of 2022. In 2021, the National Universities Commission said only about 2.1 million Nigerians are studying in Nigerian universities.

Here’s what you should know about the student loan bill:

The Student Loan Bill, now law and known as the “An Act to Provide Easy Access to Higher Education for Nigerians through Free Loans from the Nigerian Education Loan Fund,” domiciled with the Central Bank of Nigeria (CBN) was passed by the House of Representatives on May 24, 2023.

Nigerians who have successfully gained admission into any of the country’s tertiary institutions are eligible to apply for the loan through their Student Affairs Office. After screening to determine whether they meet the requirements for the loan, qualified applications from every institution will be signed by the Vice-Chancellor, Rector, or the head of the institution and the student affairs, with a cover letter, and submitted to the Nigerian Education Loan Fund.

The federal government wishes to fund student loans through, education bonds, education endowment fund schemes, 1% of all taxes, levels, and duties accruing to the Federal Government from the Federal Inland Revenue Service (FIRS), Nigerian Immigration Service, and Nigerian Customs Service. Other sources of funds include; 1% of all profits accruing to the Federal government from oil and other minerals and all sum to the Fund by way of donations, gifts, grants, and any other source.

Exam malpractice, having defaulted on any previous loan granted by any organisation, or having been convicted of drug offenses are some ways a student can be disqualified from accessing the loan.

To be able to apply, the applicant must be able to prove that his or her family income is less than ₦500,000 per annum.

Repayment for the loan, according to the act, shall commence two years after completion of the compulsory National Youth Service Corps program, without any interest.

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However, the Academic Staff Union of Universities (ASUU) has long opposed the bill and cited that adequate funding of the education sector still remains the key to quality education in Nigeria.

“ASUU would never support the issue of an education bank because the poor would not benefit from it. The best solution is adequate funding for Universities,” President of ASUU, Professor Emmanuel Osodeke said during the National Summit on Tertiary Education Reform 2022 in Abuja.

In the United States of America, student loan forgiveness has been a major debate in Congress. Since coming to power in 2020, President Joe Biden has approved at least $16 billion in student loan forgiveness.

While it is expected that the Student Loan Act will help more Nigerians acquire higher education qualifications, some believe that it will strain the federal government’s expenditure and might increase debt, which stood at ₦46 trillion (December 2022) according to the Debt Management Office (DMO).