This post traces the history of loans for undergraduate students in Nigeria from 1972 to the recently launched Nigerian Education Loan Fund (NELFUND) under the Access to Higher Education Act, 2023.
The Nigerian Students Loans Board of 1970s
The known modern-day student loan in Nigeria is dated back to 1972, when the military government of Yakubu Gowon established the Nigerian Students Loans Board.
Some analysts opined that the Nigerian Students Loans Board was part of the post-civil war recovery measure even though the war ended in 1970. They believe that it was designed to help students in the country to finance their education and to relieve parents and guardians, whose businesses were affected by the war.
With millions of Naira invested into the Nigerian Students Loans Board, the recovery and repayment posed a lot of challenges for the government, the military government of Ibrahim Babangida came up with two different decrees.
Babangida first came up with Decree No. 12 1988, aimed at decentralizing the process of awarding and recovering loans through the creation of regional offices.
Later the students loan board was replaced by the National Education Bank (EDUBANK) with the promulgation of Decree 50 of 1993 under IBB. The EDUBANK never saw the light of the day till he stepped aside.
Re-emergence Student Loan Bill
During the administration of Muhammadu Buhari in 2016, Honourable Femi Gbajabiamila, a Leader of the House of Representatives at the time sponsored a bill 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 was in hibernation mode until 2022. On November 23, 2022, the House of Reps and The Senate passed the Student Loan Bill with a modified name, “Students Loan (Access to Higher Education) Bill, 2019,”.
Its signing into law
The Buhari-led government couldn’t assent to the bill, leaving it for its successor. And on June 12, 2023, President Bola Tinubu signed the Bill becoming Access to Higher Education Act, 2023, but its stringent requirements would make it extremely difficult for students to access.
There were several stringent requirements that would make it difficult for students to access the loan.
Some of the requirements in the old 2023 Act include:
- family income of less than N500,000 per annum,
- provision of at least two guarantors.
- each guarantor shall ‘be a civil servant of at least level 12,
- a lawyer with at least ten years of post-call experience,
- establishment of education bank
- a judicial officer, or a justice of peace
- Applicants could be denied the loan if their parents are proven to have defaulted in respect to any previous loan from an organization or the government.
- The first edition of the bill only made provision for tuition fees only, neglecting accommodation and other expenses incurred daily by the students.
These and other barriers were removed from the amended copy, thereby making everyone equal under the Access to Higher Education Act.
Signing the student loan bill into law was one of the promises Tinubu made in 2015 when he was campaigning for Buhari and repeated it in the build up to the 2023 election, when he was contesting.
Major changes under the new 2024 Act
The amended copy was passed (Executive Bill) was passed by both chamber of the National Assembly on Wednesday, March 20, 2024 while Tinubu signed it on April 3, 2024, now known as the Students Loans (Access to Higher Education) (Repeal and Re-Enactment) Act, 2024, making Nigeria to once again join the list of countries that make provision for higher education loans for their citizens.
In a statement by Ajuri Ngelale, the Special Adviser to the President on Media & Publicity to the president highlighted the key amendment to the New Act as follows:
1) The new Act 2024, now covers for both tuition fees and upkeep allowance.
2) Establishment of Nigeria Education Loan Fund (NELFUND) to replace the proposed Education Bank.
3) It removes the family income threshold so beneficiaries will accept responsibility for repayment
4) It removes the guarantor requirement, applicants shall undergo verification method through the use of JAMB registration number, BVN, NIN, and evidence admission letter.
5) The loan history of the parent of the applicant shall not affect their eligibility.
6) Applicants to the NELFUND Student Loan may apply for loans to cover tuition fee payable to their school account and maintenance allowance payable to the bank account of student.
7) Beneficiaries shall be responsible to repay two years after NYSC.
8) Applicants who provided a false statement to the Fund may be guilty of a felony and are liable to imprisonment for three years.
9) The new provision also makes provision for loan forgiveness in the event of death of the beneficiary which may cause inability to repay. You can also check the difference between the two acts here, an analysis by PLAC (Policy and Legal Advocacy Centre).
Management Team
On April 5, 2024, the president approved the appointment of management team for the government loan agency as follows:
- Mr. Akintunde Sawyerr: Managing Director/CEO
- Mr. Frederick Oluwafemi Akinfala: Executive Director, Finance and Administration
- Mr. Mustapha Iyal: Executive Director, Operations
Two weeks after the constitution of the management team, the president again appointed a renowned banker, Jim Ovia, as the Chairman, Board of the Nigerian Education Loan Fund on April 26.
Ovia, a banker, businessman, and a philanthropist is the founder of Zenith Bank. He is an alumnus of Harvard Business School and holds a Master’s in Business Administration from the University of Louisiana.
Challenges
Repayment was the major challenge that the 1970s student loan board faced. As E.J. Chuta pointed out in a paper, between 1973 to 1991, the government had provided at least N46 million in loan, more than N40 million remains uncollected.
The ongoing NELFUND student loan may face a similar issue.
One of the ways to mitigate recovery problem as we pointed out in one of our articles is for the government to come up NELFUND wallet where student can begin to deposit small amount which can be used to make repayment to reduce the debt.
Government should not only provide loans, but also create an environment that enables graduates to get jobs or empower them to set up their own small businesses even before graduation.
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