Dissecting Tinubu’s student loan act

Even the worst of  President Bola Tinubu’s critics will admit that he has proved to be a man on a mission. Within two weeks of assuming duty, he has removed subsidy on fuel causing the price to rise by over 150 per cent. He has announced the unification of FX window putting an end to multiple exchange rates; suspended the governor of the Central Bank of Nigeria, chairman of the Economic and Financial Crimes Commission (EFCC), and signed into law the Student Loan Bill, among others. 

The student loan act is worthy of attention because it is the first major policy targeted at Nigerian youths whom the President claimed to have heard loud and clear following the outcome of the 2023 presidential election in which the younger generation pushed their political advocacy beyond the social media to the polls. 

In his acceptance speech after emerging the President-elect, President Tinubu promised to grant education loan to Nigerian students and ensure that university lecturers no longer go on strike. “Four years course will be four years, no more strikes. Education loans will be available,’’ he had said among others. So, signing the student loan bill into law on Monday was  indeed a promise fulfilled. 

Tagged “Access to Higher Education Act, the law makes provision for interest-free loans to indigent Nigerian students. It is also available to all  students seeking higher education in any public institution in Nigeria provided they meet the criteria for qualification. The loan  according to the document in public space is only for the payment of Tuition fees. 

The Act provides for the establishment of a Nigerian Education Bank to be funded by the Federal Government. The Bank is expected to start with a share capital of N1 billion at N1/share with the Federal Government holding 100 per cent of the shares. 

Beneficiaries are expected to start paying back two years after their compulsory national youth service. Payments will be 10 per cent direct deductions from their salary account. Self-employed graduates are expected to document their income for deductions within 60 days. They will also remit 10 per cent of their monthly profits. Defaulters will face two years imprisonment or N500,000 fine. 

To be eligible, applicants must have secured admission into any tertiary institution either federal or state. This could be universities, polytechnics or colleges of education.  The student must also come from a family with an annual income of less than N500,000 and provide at least two guarantors who must either be civil servants above Level 12 or a lawyer with at least 10 years post-call experience. 

The education bank will get its supply from education bonds, all interests arising from deposits in bank and education endowment fund schemes. Also, one per cent of taxes, levies and duties to the Federal Government through the Federal Inland Revenue Service (FIRS), Nigeria Immigration Service (NIS) and Nigerian Customs will go to the bank. It will also be funded by one per cent of profits from oil and other natural resources as well as grants, gifts and any other endowments. 

Applications are to be done through the Students Affairs Offices of the respective institutions to be forwarded to the Chairman of the Education Bank in their territory. These applications will thereafter be forwarded to the Minister of Education for approval within 30 days of submission and disbursement made immediately after the minister’s approval.

Students are disqualified from applying if they have defaulted in any loan before; have proven case of exam malpractice; ever been convicted for any offense of dishonesty or fraud; convicted for drug abuse; or their parents have any history of previous default on any loan. 

President Tinubu believes this loan is capable of ensuring that every Nigerian has access to higher education. Considering its multifaceted sources of revenue, the Education Bank is not likely to suffer a drought.  After all, other Federal Government initiatives with lesser funding channels still run successfully today. Take for instance the Tertiary Education Trust Fund (TETFUND) whose major source of funding is the two percent education tax paid from the assessable profit of companies registered in Nigeria. With this, TETFUND has done incredibly well in uplifting essential physical infrastructure for teaching and learning in many tertiary institutions in Nigeria. 

If not for TETFUND, perhaps many public institutions in Nigeria may not have new structures. I was once at the Federal Polytechnic, Ilaro in Ogun State, and all the new buildings there were built by TETFUND. The story is similar in many institutions.  The fund has also helped in training many Nigerian academics abroad, though many of these lecturers have also been lost to these foreign countries no thanks to the unconducive learning environments back home. Perhaps, the only area where Nigeria is yet to feel the worth of TetFund is in the area of research and development.

Likewise, the  Universal Basic Education Commission  (UBEC) has been sustained over the years despite being funded solely by two per cent of Nigeria’s Consolidated Revenue. In fact,  UBEC has so much money in its kitty that it is always begging state governments to come and access it. The management of the commission recently lamented that about N110bn of the intervention funds for the 2021 financial year had yet to be disbursed in 2023. So, we can imagine the amount of funds that will come to the education loan bank through all the government agencies and other sources that have been mandated to contribute towards it. 

But money is not enough. There should be a clear definition of what the scheme aims to achieve and how it intends to succeed. Right now, the first major threat to its survival is nonrepayment of loans. An average Nigerian graduate earns between N30,000 and N50,000 a month. This is less than $100. These are the fortunate ones. Many of them are unemployed. Unfortunately, this problem is not ending soon. Unemployment rate is projected to reach 40.6 per cent in 2023.  Without jobs, the loans may end up as students’ own share of Nigeria’s national cake. Besides, what happens to student dropouts who could have enjoyed the loans for years and never get employed or engaged in business. 

Yet as big as the concern over repayment is, it is just a minute part of a bigger issue. The real question is how is this loan going to ensure that lecturers are well paid as at when due and that they do not go on strike. The government has always complained of inadequate funds to honour the different agreements it signed with university lecturers. How is a student loan scheme intended to boost the revenue base of Nigeria’s public institutions? 

Secondly, Nigeria’s public tertiary institutions are currently tuition free. Agreed, students pay for course registration, accommodation, etc. but that is not tuition. So, what is the purpose of this loan. Is it to help students pay registration fees? Or is it a precursor to the introduction of tuition in Nigeria’s tertiary institutions? If students will pay tuition, how much is government projecting?

The act says the loan will ensure access to education for all Nigerians. How? Currently, less than half of about 1.5 million candidates that sit for Unified Tertiary Matriculation Examination yearly, gain admission to tertiary institutions. While some candidates don’t meet the cut-off mark for admission, majority are left out due to lack of space in the institutions they applied to.  

In 2019,  over 1.8m candidates sat the UTME, but only 612,098  representing 33.7 per cent were admitted. A report shows that about 367,499 candidates applied for the 43,717 slots available in Medical Departments in Nigerian universities in 2022. Likewise, 231,907 applied for social science courses that had only 93,277 slots while 204,734 applied for science-related courses that had just 132,796 vacancies. 

Likewise, 81,653 applied For Law-related courses that had 8,529 vacancies; 103,891 students applied for technology-related courses with 60,199 vacancies; 72,014 applied for courses under Arts and Humanities despite the 48,744 vacancies in this programme. 

For now, the only courses that have lesser candidates than available slots are Agriculture and Education. For Agriculture, 21,568 applied despite the 31,217 vacancies that were available while only 53612 applied to fill the 111,601 vacancies existing for education courses. 

When it comes to accessing tertiary education, the real problem is limited carrying capacity of our institutions which limits the number of students that can be admitted per time and lack of students’ interest in certain courses which results in the undersubscription of such courses. 

Solving this problem requires boosting the carrying capacity of our institutions and making courses like agriculture and education more attractive to students. This means employing more lecturers to boost the student-lecturer ratio; constructing more lecture theatres; investing in teaching aids; and enlarging accommodation spaces on campus for students among others. Giving students loan will not solve any of these problems.

Interestingly, the loan act states that students can only benefit from the scheme if their family income is not more than N500,000 per annum. In other words, a family where both parents are minimum wage earners are automatically exempted from the scheme since their total income is more than N500,000. If children of people earning less than $100 a month cannot benefit from a loan, who then can, or who should? 

The law also says guarantors should be above Level 12 or lawyers that have over 10 years post-call experience. How easy will it be for people that earn less than $100 a month to get senior civil servants as guarantors? 

The act is silent on both the minimum and maximum amount of money that can be drawn by a beneficiary. Maybe these details will be provided when the law is gazetted.

From all indications, President Tinubu is planning to introduce tuition in Nigerian universities. I have nothing against this. I have always advocated it. It is the way to go if we are sincere about rescuing our education system from its current state of rot. But this process should be well-thought-out. Existing laws that provide for free tertiary education in federal-government-owned public institutions should be amended. Also, the tuition should be reasonable. Education is a public good. It can’t be funded with tuition alone. Tuition can never be the alternative to government funding and student loan will not do any magic in this regard!

Olabisi Deji-Folutile (PhD) is the Editor-in-Chief, Franktalknow.com and Director at AF24NEWS.COM. Email: [email protected]