Student Loans Made Simple: Study Now, Pay Back After NYSC or Until You Have Employment

In April 2024, Nigeria witnessed a turning point in its education sector with the enactment of the Student Loans (Access to Higher Education) Act, 2024. This blog post explores the transformative amendments made under this Act, ushering in a new era of access to higher education and skill development for Nigerian students and youths.

Introduction

On Wednesday, April 3, 2024, President Bola Tinubu enacted a historic legislation: The Student Loans (Access to Higher Education) (Repeal and Re-enactment) Bill, 2024. This monumental Act aims to revolutionize access to higher education and skill development for Nigerian students and youths. Let’s explore the provisions and amendments made under this new Act.

Why the Previous Act Was Amended

The Student Loan Act, 2023, faced numerous governance and operational challenges. These included issues regarding loan purpose, eligibility criteria, application methods, repayment terms, and loan recovery mechanisms. Recognizing these shortcomings, the government opted for a comprehensive overhaul.

The Amendments Under the New Act

The Student Loans (Access to Higher Education) (Repeal and Re-enactment) Act, 2024, addresses the deficiencies of its predecessor and introduces significant reforms:

Establishment of Nigeria Education Loan Fund (NELFUND)

The Act establishes NELFUND as a legally recognized entity with the power to enter contracts, including loan agreements. This ensures efficient loan management and facilitates loan recovery processes.

Empowerment to Provide Loans

NELFUND is authorized to provide loans covering tuition, fees, charges, and upkeep for students in approved tertiary academic institutions and vocational training centers across Nigeria. This is done in order to ensure equitable access to higher education and skill acquisition opportunities.

Governance and Management Structure

The Act separates governance functions from operational management by establishing a board of directors and a dedicated management team. This has the view to ensure transparency, accountability, and effective decision-making within NELFUND.

Resource Structure

The Act defines the financial structure of NELFUND, including the establishment of a General Reserve Fund. This fund, fueled by a percentage of taxes collected by the Federal Inland Revenue Service, mantains sustainable financing for loan disbursement and operational expenses.

Changes to Eligibility Criteria

Eligibility criteria for loan applicants have been revised in the following headings:

a. Removal of Family Income Threshold

• Under the new Act, the family income threshold requirement is eliminated. This significant change allows Nigerian students from diverse socioeconomic backgrounds to apply for loans without being hindered by income limitations. Now, students can pursue higher education aspirations irrespective of their family’s financial status.
• Students who qualify for loans are now solely responsible for repayment, adhering to the guidelines set forth by the Fund. This allows individuals to take ownership of their educational pursuits and financial commitments.

b. Elimination of Guarantor Requirement

• Another noteworthy amendment is the removal of the guarantor requirement. Previously, students were often burdened with the task of finding suitable guarantors to secure their loans. However, under the new Act, this requirement is waived.
• Instead, applicants are subject to rigorous application and identity verification processes outlined by the Fund. This approach simplifies the loan application process, making it more accessible and less cumbersome for students seeking financial assistance for their education.

c. Disqualification Based on Parent’s Loan History

• Additionally, the Act prohibits the disqualification of student applicants based on their parent’s loan history. Previously, students were unfairly penalized for their family’s financial circumstances, which could hinder their educational opportunities.
• By eliminating this discriminatory practice, the Act ensures that students are assessed based on their individual merit and eligibility criteria, rather than being penalized for factors beyond their control.

Justice and Fairness Provision

A provision mandates NELFUND to ensure a minimum national spread of approved loans disbursed annually. This promotes the spirit of equity and inclusivity in loan distribution across different regions of Nigeria.

Loan Repayment Mechanisms

• The Fund shall refrain from initiating loan recovery efforts until two years after the completion of the National Youth Service Programme, allowing beneficiaries a grace period to transition into the workforce or further education.
• Beneficiaries facing financial hardship can request an extension of enforcement action by submitting a sworn affidavit affirming their lack of employment and income. This provision offers temporary relief to struggling individuals while maintaining accountability.
• Importantly, providing false information to the Fund regarding employment status is deemed a felony, punishable by imprisonment for three years. This safeguards the integrity of the loan system and discourages fraudulent claims.
• In cases of extreme circumstances such as death or acts of God preventing repayment, the Act includes provisions for loan forgiveness.

Conclusion

The Student Loans (Access to Higher Education) Act, 2024, marks a significant milestone in Nigeria’s education sector. By addressing past shortcomings and introducing comprehensive reforms, this Act ensures that all Nigerian students have equitable access to higher education and skill development opportunities.

Frequently Asked Questions about the Student Loans (Access to Higher Education) Act, 2024:

Why was the previous Student Loans Act amended?

The previous act faced challenges in governance, management, loan purpose, eligibility criteria, application method, repayment, and loan recovery

What are the main amendments under the new act?

The new act establishes the Nigeria Education Loan Fund (NELFUND), empowers it to provide loans for tuition and upkeep, separates governance and management functions, defines resource structure, and changes eligibility criteria.

What is the Nigeria Education Loan Fund (NELFUND)?

NELFUND is a body corporate empowered to provide loans for tuition, fees, charges, and upkeep during studies in approved tertiary and vocational institutions in Nigeria.

How is NELFUND governed and managed?

NELFUND is governed by a board of directors appointed by the President, while management is led by a managing director and executive directors.

How is the Fund financed?

The Fund is financed through a General Reserve Fund, receiving 1% of taxes collected by the Federal Inland Revenue Service, used for loans, operational expenses, and achieving objectives.

What changes were made to eligibility criteria for applicants?

The income threshold and guarantor requirement were removed, and applicants are no longer disqualified based on their parent’s loan history.

How are loans disbursed to applicants?

Applicants can apply for loans to cover tuition, fees, and maintenance allowance payable to the student.

What are the repayment terms for beneficiaries?

Repayment begins two years after completing the National Youth Service Programme. Beneficiaries can request an extension if unemployed, with false statements punishable by imprisonment. Loan forgiveness is available in cases of death or acts of God.

How does the Act benefit Nigerian citizens?

The Act ensures access to education and skills training, paving the way for citizens to contribute to national development.

What is the significance of the Student Loans Act, 2024?

It addresses previous challenges, provides a framework for sustainable education funding, and supports national development by empowering Nigerian youth.