On Wednesday April 3, 2024, President Bola Tinubu signed the Student Loans (Access to Higher Education) (Repeal and Re-enactment) Bill, 2024, into law. The Act addressed some shortcomings of the repealed Student Loan Act, 2023.
It establishes the Nigeria Education Loan Fund (NELFUND) to supervise, coordinate, administer, and monitor the management of student loans in Nigeria. The new Act separates the governance functions from the management operations of NELFUND, with a board of directors overseeing its operations and a management team responsible for day-to-day management and operations.
The Act also changes the eligibility criteria for applicants, removing the family income threshold and
guarantor requirement, and establishes a justice and fairness provision mandating the Board to ensure a minimum national spread of loans approved and disbursed in each financial year.
The new law is expected to improve the quality of education and increase access to education for millions of Nigerian youth population and children from disadvantaged social and economic backgrounds in the country. It is a significant step towards ensuring that no one is excluded from quality education and opportunity to build their future due to their economic circumstances.
Key Provisions:
~ Establishes the Nigeria Education Loan Fund (NELFUND) - This is a body that can manage student loans and ensure their proper disbursement and repayment.
~ Provides loans for qualified Nigerians - NELFUND will provide loans to qualified students to cover tuition fees, charges, and living expenses while they study at approved institutions.
~ Separates governance from management - A board of directors will oversee NELFUND, while a management team will handle day-to-day operations.
~ Creates a diversified fund pool - NELFUND will have a diversified pool of funds to ensure all qualified applicants can get loans.
~ Removes limitations on eligibility - Students from all income backgrounds can now apply for loans. Students won't need guarantors and won't be disqualified based on their parents' loan history.
~ Ensures fair distribution of loans - The Act mandates a minimum national spread of approved loans each year to ensure students from all regions get a fair chance.
~ Provides for loan forgiveness - The Act includes provisions for loan forgiveness in cases of death or circumstances beyond the borrower's control.
~ Repayment after NYSC - Loan repayment won't begin until two years after a student completes the National Youth Service Programme.
Key Significance:
The new Student Loans Act is a big step towards making tertiary education more accessible to many Nigerians previously excluded for financial reasons by:
~ Increased enrollment in tertiary institutions
~ Improved quality of education by allowing more qualified students to attend universities
~ Give young Nigerians a better chance to develop critical skills and contribute to national development
A word of caution: Beneficiaries must be prudent in borrowing under the Act to avoid post-graduation debt trap that hinder progress after school. In countries like the US, many struggle to repay student loans decades after graduation, with many too burdened to ever escape on their own. By being judicious in loan uptake under this Act, Nigerian beneficiaries can safeguard their future financial stability. A warning from the Bible is apt here: "If you find honey, eat only what you need; otherwise, you’ll get sick from excess and vomit." Proverbs 25:16
The Act has been praised by key stakeholders in education who believe strongly that it is a major win in Nigeria's educational sector reforms, with the potential to transform lives for many young Nigerians. They note that President Tinubu's signing of the Student Loans Act shows his administration's commitment to education and its belief that education is the key to fighting poverty.
©NewsMogul
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