UNDERSTAND NIGERIA’S NEW STUDENT LOAN BILL:

 

Understand Nigeria’s new Student Loan bill:

Discover eligibility requirements, application process, loan amounts, and repayment terms.

Get your common questions about student loans in Nigeria answered here.

Will I Face Imprisonment for Not Repaying a Student Loan?

On June 12, 2023, Nigerian President Bola Ahmed Tinubu enacted the Student Loan bill, a law designed to provide students with financial assistance for higher education. The bill heralds the establishment of the Nigeria Education Bank, which will oversee the loan process under the supervision of the Central Bank of Nigeria. However, the law’s implementation timeline remains uncertain, raising several queries about its operation.

Eligibility Criteria for the Student Loan

To meet the requirements applicants must have successfully secured admission to any state or federal government university, polytechnic institute, college of education, or vocational school. Your income or your family’s income should not exceed N500,000. Furthermore, applicants must provide guarantors who are civil servants with a minimum of 12 years of service. Alternatively, a lawyer with at least 10 years of experience or any judicial officer or justice of peace (JP) could serve as a guarantor.

Loan Application Process

When it’s time to apply for the fg student loan as per the Act, candidates must apply through the Nigeria Education Bank via their admitted institution. The application will proceed through the Student Affairs Division of each higher institution, which will compile a list of candidates and submit it to the bank along with a cover letter from the Vice Chancellor. The letters will be addressed to the chairman of the Education Bank, and the disbursement of funds will commence within 30 days. However, the Act stipulates that institutions must submit their lists no later than 30 days after admissions close.

Qualifying Criteria for the Loan

The loan is intended for all students pursuing higher education are not eligible for this loan. The loan does not discriminate based on gender, religion, ethnicity, or disability. It is purely intended for tuition fees; students seeking funds for personal upkeep or projects are not eligible. The bank will conduct background checks to ensure that the applicant has not defaulted on any previous loans from any other organization.

Loan Amount

The exact amount of loan that successful students may receive has not been specified in the law signed by President Tinubu. Education expert Sadiq Aminu suggests that the amount may vary based on the institution, course of study, and duration. This is because the beneficiaries will include students from vocational training centers alongside university students, and thus, the loan amount cannot be uniform.

Repayment Consequences

The law mandates that loan recipients begin repayment two years after completing the National Youth Service Corp (NYSC) program. The repayment will consist of a direct deduction of 10% of your salary if you are employed or 10% of your total profit each month if you are self-employed. Failure to repay the loan may result in a conviction, leading to a two-year imprisonment or a N500,000 fine, or both.

Repayment Timeline

Beneficiaries are required to start repaying the loan two years post-graduation. The Education Bank will collaborate with employers to ensure the appropriate deductions are made from the salary and remitted to the student loan fund account.

Loan Administration

The newly established Nigerian Education Bank will supervise, coordinate, administer, and monitor the management of student loans in Nigeria. This includes approving and disbursing loans to qualified applicants, as well as tracking graduates to ensure timely loan repayment.

Funding Sources for the Education Bank

According to the law, the bank will obtain its operating funds from several sources:

1% of all taxes and levies collected by the Federal Inland Revenue Service, Nigeria Customs, and Nigeria Immigration Service.

Education Bond

Interests from regular deposits in the bank.

Education endowment fund schemes

Donations, gifts, and government grants

Other savings and interest from the bank’s investments.

Stakeholder Opinions on the New Law

The Academic Staff Union of Universities (ASUU) and their polytechnic counterpart ASUP have stated they will soon respond to the new law. On the other hand, Adejuwon Emmanuel, the National Association of Nigerian Students Zone D coordinator, praised the law, stating it would benefit students whose parents can’t afford tuition fees. However, he urged the government to reconsider the repayment plan, given that not every graduate starts working within two years of graduation. To sum up, the Student Loan Bill presents a promising avenue for Nigerian students to finance their higher education. As the details are further fleshed out and the program begins implementation, the impact of this law will become more apparent. It is crucial for all potential beneficiaries to understand their obligations and rights under this new law to maximize its benefits and avoid any legal pitfalls