Nigeria New Education Funding And Methods Of Repaying The Student Loan Act: Five Things to Know

President Bola Tinubu signed the student loan bill into law on June 12, 2023, while Nigerians were immersed in the nostalgia that Democracy Day conjures up.

Femi Gbajabiamila, the recently-retired speaker of the house of representatives, sponsored the bill.

The measure, which was approved on third reading in the lower chamber on May 23, 2023, aims to give financial aid to Nigerian students attending educational institutions.

The student loan program and reforming the country's educational system were two of the main focuses of Tinubu's platform during his presidential campaign.

A pilot student loan program will be implemented for academic schools, the president promised, adding that teaching would be a "rewarding" career option.

According to him, "Institutions will impose more cost-effective tuition fees, and the loan program will have a maximum borrowing limit and flexible repayment provisions with consideration for employment rates and other conditions."

The new legislation makes it possible for Nigerian students in tertiary institutions to obtain loans from the Nigerian education loan fund without paying interest.

The new student loan law: five key things to know. 

EACH AND EVERY STUDENT SEEKING FEES IS ELIGIBLE

All students who have been admitted to a public university, polytechnic, college of education, or other technical and vocational education and training (TVET) program in Nigeria are eligible to apply for the loan, per the statute.

According to the laws, in order to be eligible for the loan, the student's or family's income must be less than N500,000 annually.

A minimum of two civil employees with at least 12 years of service at level must also be provided as guarantors, as must a lawyer with at least 10 years of post-call experience, a judge, or a justice of the peace.

Students whose parents have failed on previous loans will not be eligible, according to the paper.

A LOAN FUND FOR EDUCATIONAL PURPOSES CHARGED WITH DISBURSEMENT

Nigerian Education Loan Fund is established by the new law. The fund will have the authority to oversee, coordinate, manage, and administer student loans across the nation.

The law requires the organization to assess applications for student loans submitted by applicants through higher education institutions.

The objective specified under Section 6 of this Act requires that the Fund be domiciled in, managed, and administered by the Central Bank of Nigeria (CBN) through the Nigerian money deposit banks.

"To carry out the duties of the fund described in section 6 of this act, the governor of the CBN shall establish a special committee.

"The governor of the CBN shall be the chairman of the committee, who shall appoint the secretary of the committee."

In accordance with the act, students who meet the necessary requirements must submit an application to the chairman of the education Fund through their respective institutions.

Additionally, the applicant's application and payments are made within 30 days of the application's arrival at the committee chairman.

STUDENT'S ACADEMIC RECORDS ARE CLOSELY MONITORED. 

A list of all qualified applicants from the institution, along with a cover letter signed by the vice-chancellor, rector, or head of the institution, and the student affairs office are required to be included with every application, according to the new law.

Additionally, it warns that applicants will not be accepted if they have previously defaulted on loans, been found guilty of exam fraud, committed a felony, or engaged in drug use.

METHOD OF LOAN REPAYMENT

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The National Youth Service Corps (NYSC) program must have been completed before the loan can be deducted from the income of successful candidates by their employers in accordance with the legislation.

"Any beneficiary of the loan to which this act refers shall commence repayment two years after completion of the NYSC programme," the document stated.

10% of the beneficiary's salary must be withheld directly from their paycheck by the employer as repayment.

In cases when the beneficiary is self-employed, he must deposit 10% of his monthly gross income into the student loan account that the bank will provide.

A self-employed person must provide the commission with all necessary information, including the name of the business, its address and location, registration documents, its partners' names, bankers' names, directors' names, and shareholders' names, within 60 days of attaining that position.

1% TAX LEVIES FROM FIRS WILL BE USED TO FUND THE BANK

According to the legislation, 1% of taxes collected by the National Immigration Service (NIS), the Federal Inland Revenue Service (FIRS), and 1% of oil profits will be used to fund the education bank.

The law will punish defaults, it was also mentioned.

"Anyone found to be in default of the provisions of sub-section 4 above or found to be aiding the default of any of the provisions of this Act is guilty of an offence and, if convicted, shall be liable to imprisonment for two years or a fine of N500,000 or both," the document states.