Students loan scheme: Fears, flaws as Tinubu signs bill


Just last week, President Bola Tinubu signed the Access to Higher Education Act, 2023, also known as the Students Loan Act, a law providing interest-free education loans for Nigerians seeking tertiary education.

There are indications, however, that the newly signed act might not get the support of key stakeholders in the education sector, including the Academic Staff Union of Universities (ASUU).

The bill, sponsored by the Speaker of the 9th House of Representatives, Femi Gbajabiamila (now the President’s Chief of Staff).

First introduced in 2016, the bill failed to gain traction. Reintroduced three years later, in 2019, it only gained the attention of the National Assembly in November 2022. The act outlined how the funds would be generated, saved, and administered.

The threshold of eligibility for the loan was low enough to accommodate the average Nigerian student. Similarly, the loan application process was simple enough, consisting mainly of the submission of an application letter, a copy of the admission letter, and two guarantor letters.

The modality of repayment, however, was a different kettle of fish altogether. According to the act, beneficiaries of the loan begin repayment precisely two years after the completion of their NYSC programme.

A beneficiary shall remit 10 per cent of their income to the fund at the end of every month, and defaulters risk a N500,000 fine, a two-year jail term, or both when they fail to repay their loans.

In the past few days, the Students Loan Act has come under scrutiny.

In its submission, ASUU called on President Bola Tinubu to change the loan to a grant for indigent students, insisting that the loan is “impracticable and unsustainable”.

The union said the conditions for the loan are not practicable, adding that more than 90% of students won’t meet the stringent requirements to access and repay the loan.

Speaking on Channels Television on Sunday, the national president of ASUU, Prof. Emmanuel Osodeke, said: “It would have been better if we were giving it to those students who are very poor; it should be called a grant, not a loan.”

According to him, with more than one million students in Nigerian public universities, the loan cannot adequately cater for their tuition.

Osodeke said: “The idea of student loans came in 1972, and it was in a bank that was established. People who took loans never paid; you can go and investigate. In 1993 and 1994, the military enacted Decree 50 and also set up a Students’ Loan Board. The National Assembly domesticated it in 2004, and within a year, it went off. The money disappeared. We want to see how this one will be different.”

Speaking further, he said: “We, as a union, also did research of countries all over the world, and of people who have benefited from this loan, they were committing suicide. Recently, (President Joe) Biden has been trying to pay back the bank loans of some who borrowed in the US.

“It is better to look for alternative means of funding education than to encumber students whose parents earn N30,000 a month with a loan.

“It should be called a grant since it is coming from the Federation Account and not that (after) these people have access to it and when they are graduating, they have heavy loads behind them, and within two years, if they don’t pay, they go to jail. That’s why we’re talking about collective bargaining; you have views from all sides,” he expatiated.

Speaking to the DAILY POST on the same issue on Tuesday, the chairman of ASUU at the University of Nigeria, Nsukka (UNN), Christian Opata, wondered if the level of corruption in the country, coupled with the lack of appropriate mechanisms by the government, would let the policy succeed.

Opata also questioned the sustainability of the scheme, judging by the moribund state of the economy.

“For me, I am even seeing the whole thing from a different perspective. A different perspective in the sense that before a nation embarks on such an exercise, it has to ask several questions. First, what is the feasibility and possibility of it succeeding? Based on previous experiences, we saw something similar to that. What is the probability of success or failure? Yes, on the surface, it might appear very okay, but in terms of implementation, it will be very problematic,” he said.

Delving into the past, he said: “Let us cast our minds back. We had a similar programme then under President Babangida, which they wanted to use to get people out of poverty, and that led to the establishment of Peoples Bank, headed by Tai Solarin, one of the most sincere Nigerians. But what was the fate of Peoples Bank? So, based on the level of corruption in Nigeria, what mechanisms has the government put in place to ensure there is no repeat of such? That is the first question any person who wants to be sincere about a student loan should ask himself or herself.”

He also weighed the practicability of the scheme, saying: “On the issue of the loan itself, good if you give a loan and it will be returned. What is the guarantee? What has the government put in place to ensure that once a student finishes school, he will be employed? You give someone a moratorium of four years, and once you finish, you start paying back, so where will he get the money if he is not employed? Did they make a provision for giving them loans for small-scale businesses, assuming they want to go into small-scale businesses from where they will be generating money to pay for the two? This means, yes, you have a very good idea, but in terms of sustaining that idea, how sustainable is it?”

Opata added: “The issue of sustainability is based on the economy. Now look at even the exchange rate and everything; the economy is dying, and it is under such a situation that you are creating a loan.

“Yes, students will be very eager to take it; at least let them graduate, but after graduation, what next?”

The university don further pointed out that the loan scheme has exposed government’s hypocrisy where education is concerned.

“The government is saying they cannot fund university education any more. You cannot fund university education any more, but you are bringing about a loan that you are not sure will be paid by the beneficiaries. You have not even set up the modalities. If you have the money for the loan, what is the conviction that you do not have the money to sponsor education as you have been sponsoring?”

An official of the National Association of Nigerian Students, NANS, who wished to keep his identity anonymous, opined that the criteria stipulated for obtaining the loan are questionable.

He questioned the government’s sincerity in addressing issues bordering on the poor masses.

”The whole arrangement is laughable. I wonder what exactly they intend to achieve; we can only wait and see how it plays out,” he said.

Meanwhile, the Vice Chancellor of Madonna University in Anambra State, Prof. Uchenna Anyanwu, has said there is a need to also include private universities in the student loan policy.

Anyanwu told the DAILY POST that private universities also contribute to the national coffers by paying taxes and providing employment to Nigerians.

He said: “As for the student loan, I think he should have extended it to private universities because there are indigent students, as it is meant for indigent students. There are also indigent students at the private universities. It is a good idea, but he should have gone further to also include private universities. They are students too.”

He said further: “In fact, private universities, as we speak, are more than public universities; from what is happening, private universities may overtake public universities in the nearest future as providers of university education. So there is a need to also include private universities.”

He added: “The TETFUND is also restricted to public universities; private universities are not benefiting, but we also pay taxes. We are contributing. See, private universities give employment to Nigerians; we also contribute to national coffers by paying taxes”.

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