IN DETAIL: No guarantor or family income statement needed in re-enacted student loan policy

The re-enacted student loan policy of the federal government has eliminated the eligibility clause requiring applicants to provide a guarantor and declare their family income.

President Bola Tinubu, in June 2023, enacted the student loan policy to grant interest-free loans to needy students.

The scheme was slated to commence between September and October 2023 but implementation was repeatedly deferred.

The policy was also heavily criticised for its stringent requirements which many stakeholders argued would render the scheme inaccessible to indigent students who need it the most.

These included that the prospective applicant’s family’s annual income must be less than N500,000.

Another was that they needed two guarantors including a civil servant with 12 or more years in the service and a lawyer of at least 10 years post-call.

In March, the president wrote to the national assembly requesting the repeal and reenactment of the law.

At the state house in Abuja on April 3, Tinubu signed the re-enactment bill into law, effectively repealing and reintroducing the policy.

Ajuri Ngelale, the special adviser to the president, said the repealed Student Loan Act of 2023 had challenges bordering on governance, management, purpose, eligibility criteria for applicants, method for application, repayment provisions, and recovery of the loans.

Ngelale said the amendments made to the policy include the establishment of the Nigeria Education Loan Fund (NELFUND) as a corporate administrative body tasked with overseeing loan contracts and initiating action to ensure repayment.

NELFUND is also tasked with providing loans to qualified Nigerians for tuition, fees, charges, and upkeep during their studies in approved tertiary academic institutions and vocational and skills acquisition institutions in Nigeria.

The fund is also meant to build, operate, and maintain a diversified pool of funds to provide loans to qualified applicants and ensure access to higher education, vocational training, and skills acquisition.

Below are other attributes of NELFUND as reflected in the amendments in the Student Loans Act 2024:

• NELFUND’s governance and management functions are separated by establishing a board of directors headed by a chairman and a secretary.
• The board’s members are drawn from relevant ministries, regulatory bodies, and participating agencies including the Federal Ministries of Finance and Education, the FIRS, NIMC, NUC, NBTE, and NCCE.
• Representatives of universities, polytechnics, colleges of education, students of tertiary institutions, and the organized private sector also have a place on the board.
• The act also establishes a management team led by an MD, including executive directors responsible for the day-to-day management and operations of the fund.
• The president is tasked with appointing the board and management.
• The act also redefines the resource structure of the fund by, among others, establishing the General Reserve Fund.
• The GRF is to be funded by 1 percent of all taxes, levies, and duties collected by the Federal Inland Revenue Service (FIRS) and accruing to the benefit of the Federal Government.
• From the GRF, NELFUND is expected to disburse amounts payable as loans to qualified applicants for tuition, fees, charges, and upkeep.
• The GRF will also finance the fund’s operational expenses.

The re-enactment act also adjusted the eligibility criteria for applicants.

• It removed the clause requiring applicants to declare their family income. This is so students can apply for loans and accept responsibility for repayment according to the fund’s guidelines.
• It removed the guarantor requirement so that students can apply for and receive loans subject to application and identity verification guidelines as provided by the fund.
• Among the adjustments to the eligibility criteria is that student applicants can no longer be disqualified based on their parent’s loan history.

The re-enactment establishes a justice and fairness provision mandating the Board to ensure a minimum national spread of loans approved and disbursed in each financial year.

Applicants to the fund may seek loans to cover, tuition, other fees payable to the school, and maintenance allowance payable to the student.

Adjustments were also made to the guiding principles surrounding the repayment of loans by beneficiaries:

• The fund will not initiate recovery efforts until two years after an applicant’s youth service run.
• A beneficiary may request an extension of enforcement action by the fund by providing an affidavit indicating that he/she is neither employed in any capacity nor receiving any income.
• Any person who provides a false statement under this provision is guilty of a felony and is liable to imprisonment for three years.
• Makes provision for loan forgiveness in the event of death or unforeseen tragedy causing inability to repay.

Ngelale said the re-enacted legislation “effectively removes the previous encumbrances” in its first iteration.

“It paves the path for the protection of Nigeria’s future by ensuring that citizens have the means to fund their education, acquire critical skills, and become productive contributors to national development,” the special adviser added.