Student Loan Law in Nigeria: Who Will Be Ineligible?

On Monday, June 12, 2023, a bill to make special provisions for student loan in Nigeria was signed into law, meaning undergraduate students will have access to interest-free loan across all higher institutions in the country.

But there are exceptions, some students will not be eligible to access the interest-free credit facility, are you one of them? Before that, we need to know what the new law means the Nigerian students.

What is Student Loan Law?

A new student loan in Nigeria now known as the “Access to Higher Education Act” is a law backing the access of undergraduates to loans at the Nigerian Education Bank which enables them to complete their post-secondary education and the associated fees, such as living expenses, tuition, and books and supplies.

The signing of the student loan bill into law by President Bola Tinubu coincides with the celebration of Democracy Day celebration. It is a landmark achievement for the new government of Tinubu whose victory is being challenged at the court by main opposition parties. It is the first of its kind in Nigeria’s history.

Origin of Student Loan Bill in Nigeria

In 2016, Honorable Femi Gbajabiamila who was then Leader of the House of Representatives pushed for legislation titled “Bill for an Act to Provide for Easy Access to Higher Education for Nigerians Through Interest-free Loans from the Nigerian Education Bank”.

The Bill didn’t receive the kind of acceleration that a few Bills received until 2022 and on November 23, 2022, when both chambers of the National Assembly passed the Student Loan Bill. By 2022, the title of the Bill had been shortened to “Students Loan (Access to Higher Education) Bill, 2019,”.

In essence, the Bill started during the administration of former President Muhammadu Buhari. However, he was unable to sign it, leaving it for his successor.

Gbajabiamila who is now the Chief of Staff to President Tinubu witnessed the signing of the student loan bill into law at the Presidential Villa in Abuja on June 12, 2023.

What is the repayment process?

1. The repayment of the loan will be two years after completion of the one-year mandatory National Youth Service Corps (NYSC).
2. It would be by direct deduction of 10% of the beneficiary’s salary at source by the employer.
3. Where the beneficiary is self-employed, he shall remit 10% of his total profit monthly.

Who will be ineligible for the new student loan?

Those that will not be eligible to enjoy the student loan signed by Tinubu are:

1. Students who are debtors on loan apps like FairMoney, PalmPay and other loans apps in Nigeria
3. Undergraduates who are convicted of a felony or any offence involving dishonesty or fraud
4. Undergraduates who are found guilty of exam malpractice by any school authority
5. Students who are involved in cultism and found culpable by their institution.

How will the student loan work?

The law now gives legal backing to the establishment of the Nigerian Education Bank (NEB). We hope to see that very soon, but we don’t know how long it will take to take off. Some of the things you need to know about how the Student Loan Law in Nigeria will operate are:

1) The Nigerian Education Bank is empowered under the Access to Higher Education Act to have powers to supervise, coordinate, administer, and monitor the management of student loans in Nigeria.

2) NEB will receive applications for students loan through higher institutions in Nigeria on behalf of the applicants.

3) The Nigerian Education Bank will proceed to screen the applications to ensure that all requirements for the grant of students’ loan under the Act are satisfied.

4) The power to approve or reject the application shall belong to the education bank.

5) NEB has the power to disburse the loan to qualified applicants.

6) It doesn’t stop there, there is also ‘after-disbursement’ monitoring by the Nigerian Education Bank, making it to control and monitor and coordinate the students’ loan account/fund.

7) It will monitor compliance in respect of disbursement.

8) The loan will only be accessible to Nigerian studying in Nigeria’s higher public institutions including colleges of education, polytechnics, and universities.

9) NEB will also monitor the academic records of grantees of the loan to obtain information on their year of graduation, national service, and employment to ensure that grantees of the loan commence repayment of the loan as at when due.

10) For individuals who think that it is another opportunity to benefit from the ‘national cake’, read this: There will be jail terms for student loan defaulters.

Everyone is equal under the Access to Higher Education Act

The rights and access of every Nigerian undergraduate is protected under the Access to Higher Education Act. All students seeking higher education in any public institution of higher learning in Nigeria shall have an equal right to access the loan irrespective of gender, tribe, religion, position or disability of any kind.

During the passage process, the sponsor of the Bill Gbajabiamila said:

Method of Application

Students will be required to submit their application to the Students Affairs Offices of their respective institutions with relevant documents including their admission letter.

Qualified applications will be forwarded officially by the institution to the Chairman of the Education Bank in their territory.

Conclusion

There might be more stringent conditions for the Access to Higher Education Act to access the credit facility to avoid instances of using the loan to ‘japa’ or deploying it for the purpose it isn’t designed. There will be mechanisms in place by the government to minimize default and avoid the culture of “national cake”.