Obtaining a university degree can be a significant financial burden. The tuition, accommodation, and other expenses related to campus life are steadily increasing, making it increasingly challenging to afford. Student loans now look like acceptable means for addressing the financial gap in many nations. Would this work in Nigeria?
President Tinubu’s Manifesto during the presidential campaign included a student loan scheme and restructuring of the nation’s educational system. On June 2023, the student loan was approved to be implemented starting September 2023.
With the new student loan law aiming to provide loans to pay tuition fees in higher institutions, the biggest concern is
Will the student loan scheme work in Nigeria? Is the loan the most important? Or is it creating job opportunities? What happens if the borrowers cannot be employed after two years of service?
Since the loan condition states that an individual must repay the debt two years after completing National Service or risk going to jail while still bound to refund the money.
The first time the student loan program was proposed was under the Gowon regime in the 1990s, and it failed due to several crucial factors.
Some of those also are the main threats to the current regime’s success. They are as follows:
1. The Unemployment Rate
Access to employment opportunities for every qualified citizen is a social obligation of the government that can promote independence and security.
This is especially important for students who must manage financial obligations related to education and other life pursuits. With access to such opportunities, they can pay their tuition and save for the future. However, when citizens cannot be guaranteed work after graduating from higher education institutions, it becomes challenging for them to earn and thrive, let alone repay the loans obtained.
In 2021, it was revealed that former US president, Barack Obama, had only recently finished paying off a college debt before his time as a senator. This raises the question of how feasible a similar plan would be in Nigeria’s unpredictable job market.
To tackle the challenge of unemployment, the government should focus on creating job opportunities by supporting the growth of the private sector, increasing productivity, and generating more employment options. It is crucial to address this issue before implementing student loans, as students should feel confident about their job prospects after graduation before taking on such financial obligations.
2. The Requirements exclude the most disadvantaged population
The student loan is intended for students who lack the financial resources to support their university degree. However, the requirements to access the loan may not be readily available to these students, making them ineligible.
The law requires two guarantors, either level 12 civil service officers or lawyers with at least ten years of experience, to be granted a loan. It’s worth considering how many people have connections to individuals of such high caliber.
Additionally, it’s essential to question what percentage of Nigerians would be willing to be a guarantor, considering the potential consequences of imprisonment if the beneficiaries fail to repay within the given timeframe.
It is concerning that loans are intended to assist those who cannot afford the necessities required for higher education, yet they are burdened with unreasonable conditions and penalties.
3. The Wage Act and the Disguise of No-Interest Loans
The Nigerian government provides interest-free loans to financially needy students through the Student Loan Law. However, students must apply through their schools to the Chairman of the Education Bank, and their annual income or their families must be less than N500,000 per year.
This program aims to support impoverished students in their pursuit of education, but it has its shortcomings. The government’s practice of justifying the loan through increments and excessive fees threatens the hope of the average Nigerian student.
The post-national service payment period and the caliber of guarantors required are also concerning. Despite its potential benefits, the loan scheme’s approach needs improvement to support better the students it intends to serve.
The current financing procedure cannot fulfill the academic aspirations of Nigerian students from low-income households. As a result, many students may opt for alternative sources of income, such as side hustles or fast-money schemes, instead of pursuing postsecondary education in the long run.
4. The Loan is exclusive to a single campus need
Student loans are typically used to cover expenses related to education, such as tuition, textbooks, and living costs. However, it is essential to consider the well-being of students beyond just their academic needs. Based on Tinubu’s law, the current loan system only addresses education expenses, leaving students struggling to afford necessities like housing and food.
This can hurt their ability to succeed in school and ultimately graduate. Loans must provide more comprehensive support to students to ensure their success and well-being.
Conclusion.
Considering taking out a student loan in Nigeria, weighing your options carefully is essential. While loans may be a viable solution for some, better alternatives may be available. Before making any decisions, it’s critical to consider factors such as payback periods, interest rates, debt forgiveness programs, future employment prospects, and overall financial impact. Seeking advice from experts such as financial advisers, education counselors, or loan officers can help you make informed decisions based on your circumstances. As a student, I recommend exploring options like scholarships, grants, work-study programs, online business, side hustles, part-time employment, and savings and investment plans to help fund your education.
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