13 Advantages of Student Loan in Nigeria

If funding has been a major impediment standing in your way of getting higher education, then the Nigerian Education Loan fund (NELFUND) can help you achieve your academic goal without having to worry about tuition fees and the monthly pocket-money to take care of other expenses.

You don’t have to worry yourself again about how you are going to finance your higher education.

Contrary to the opinion of the critics of the Nigerian government that it is accumulating loan for the undergraduates through NELFUND, the ongoing credit facility to undergraduates known as the Student Loans (Access to Higher Education) (Repeal and Re-enactment) Bill, 2024, signed into law by President Bola Tinubu on April 3, 2024, is one of the best education policies since 1999.

Its benefits outweigh the demerits, which is why you should not let the opportunity elude you.

So, here are the advantages of NELFUND student loan to undergraduates:

No credit history needed

It is easier to be eligible for NELFUND than applying for a credit facility at any commercial banks or on any of the shark loan apps. Financial institutions would want to check credit history before your loan application can be considered.

If you already have an outstanding loan yet to be settled, your chances of getting a new one will be slim or they may increase their interest rate because they would consider you a higher risk.

But the benefit of NELFUND is that the agency is not bothered about your credit history. If the details you use for application are correct with the ones with your institution and on your National Identification Number (NIN) and your Bank Verification Number (BVN), your loan application has to be approved.

It’s a 2-in-1 loan

The Nigerian education loan pays more than just the tuition fee. Apart from expenses to cover tuition fees, applicants can also apply for upkeep loans, which can simply described as pocket-money covering a whole year (N20,000 per month), which is disbursed directly into the bank account of the student.

So, you can use the upkeep loan to buy your textbooks, settle accommodation fees, and subscribe for data and take care of other expenses not covered by the tuition fee.

Easy to qualify

To qualify for NELFUND, you need to be a Nigerian and have been admitted for undergraduate programme at any of higher institutions owned by the government.

And if your data on your NIN is the same with the record with your institution. You can submit an application in less than 20 minutes if you have all the records handy. There is no paperwork. A conventional financial institution cannot grant your loan application without paperwork, particularly when it is a business loan.

No surety

To apply for student loans in most countries that make provision for education credit facilities, their governments require that you provide a surety. For instance, you will need someone to co-sign as surety if you are a full-time student and want to apply for a student loan in the United States.

But to get the Nigerian education loan , you don’t need a surety. You only need to be a Nigerian and must be an undergraduate, that’s all, no surety

Chances of getting loan forgiveness

No private lender would grant loan forgiveness to their debtors. Even in the event of death, a private lender would find other means of getting their money back, no emotions.

But the Access to Higher Education Act establishing education loans for undergraduates in Nigeria makes provision for loan forgiveness, especially in the event that the beneficiary dies before repayment.

Apart from death, there are chances that presidential aspirants in Nigeria will use student loan forgiveness as a strong campaign strategy to get the support of parents and the Nigerian youth in future elections.

In the United States, for instance, the federal government offers loan forgiveness under some programmes such as the Public Service Loan Forgiveness programme, which allows borrowers to get forgiveness after at least 10 years of public service and 120 qualifying monthly payments.

Nigeria will most likely see this kind of forgiveness happen in future. But this doesn’t mean you shouldn’t make plans to repay your education loan.

It is collateral-free

You don’t need a collateral to access the Nigerian Education Loan Fund. The requirements to qualify for the loan are straightforward, no hidden terms and conditions.

Most private lenders will want to see the bank statement of your business for at least a year or more, depending on the volume of loan you want to take. But NELFUND is collateral-free. Applicants don’t need to use their parents’ family farmland or building as collateral.

Employment-driven repayment options

NELFUND can be described as a pay-as-you-are-employed credit facility. You can only start to repay when you have a source of income or when you have been employed. This reduces the pressure of repayment when you can’t find a job two years after the NYSC programme.

No guarantor needed

The first Bill that was approved by the president – Student Loan Act, 2023 – made provision for applicants to produce a guarantor as part of the eligibility criteria.

However, the provision for a guarantor in the 2024 Re-enactment Act was removed to make the student loan more accessible for the Nigerian students. Applicants now only need to pass the identity verification system on the application portal.

Parent’s loan history doesn’t count

The previous Act planned to use parent’s loan history as part of the eligibility process, but that part has been removed.The loan history of parents and guardians no longer affect their eligibility.

In fact, the application process on the NELFUND portal does not even mention anything relating to the parent’s loan history.

Interest-free

While government-backed student loans in other jurisdictions have an interest rate of 2.75% or more, depending on the country, the Nigeria-backed student loan is interest-free.

This means you will be paying back exactly what you borrowed, that should be the fairest credit facility for undergraduates in Africa and in the world.

Fantastic repayment grace period

Repayment of student loan in Nigeria will only be initiated two years after the completion of the mandatory one year youth service programme, if the beneficiary has been employed. This isn’t the case in most parts of the world.

The law establishing the FUND in Nigeria also gives the beneficiary the privilege to request for an extension in case the beneficiary is unable to be gainfully employed two years after the NYSC programme and he is not receiving any income.

This is not the case in the United States, beneficiaries of federal loans in the U.S. are given only six months grace period after graduation or when a student leaves school either by drop-out when repayment will be initiated.

Using this criteria, it is safe to say that the Nigerian student loan is better than the U.S. student loan in terms of repayment period.

Flexibility to focus

Unlike before when financially-challenged students – if not drop out – mix lectures because they try to hustle to pay tuition fee, this loan allows you to focus in classes because you don’t have to worry too much about tuition fee and getting monthly upkeep allowance.

The fact that the government understands that paying only tuition fees isn’t enough makes the monthly upkeep credit alerts a fantastic financial idea.

No family income threshold

There is no family income threshold for you to apply and get the loans. Even if your parents do not have any stable source of income, you need not worry because the management of the Fund isn’t going to use that to judge you. The basic thing is that you will accept full responsibility for paying back the loan in future.

Conclusion

For now, no commercial banks give student loans. In countries where private lenders offer student loans, it comes with a higher interest rate, making the government-backed loan such as NELFUND the best.

Opeyemi Quadri

Ope is a seasoned content creation specialist and researcher with over a decade of experience writing on education, student aid, and government policies. He is deeply passionate about education-related data.

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