A Synopsis of the Students Loan (Access to Higher Education) Act 2023

Contributed By Betse Asuquo Esq.

INTRODUCTION

On the 12^th of June 2023, the Nigerian President assented to the Students Loan Bill. The Act is designed to assist indigent students in public institutions of higher learning to access government loans for their tuition. As part of efforts to implement the Act, a sum of 50 billion naira was approved for the Loan Scheme, in the 2024 budgetary allocation. What is more, the Special Committee established under the Act for the Nigerian Education Loan Fund (NELF) had held its inaugural meeting in preparation for the commencement of the programme which was to kick-off on the 26^th of February 2024.^[1]

This article will examine the salient provisions of the Act. It is expedient to state that the Act repeals the Nigerian Education Bank Act Cap. N104 LFN, 2004 and transfers all assets, funds and properties vested under the repealed Act, to the NELF.^[2] The principal objective of the Act is to provide for ease of access to higher education for indigent Nigerian students through interest-free loans from the NELF established by the Act.^[3]

SALIENT PROVISIONS OF THE STUDENTS LOAN (ACCESS TO HIGHER EDUCATION) ACT 2023.

The Act applies to all matters relating to the application, processing and grant of loans to indigent Nigerian students of higher institutions of learning in Nigeria through the Nigerian Education Loan Fund^[4] and such students have equal rights to access such loans without any form of discrimination.^[5] Of particular note is the fact that loans can only be granted under the Act in respect of the payment of tuition and no other fees^[6] and such is only granted upon the fulfilment of the requirements laid down by the Act and any other guideline made pursuant to it.^[7]

Establishment of the Nigerian Education Loan Fund and its Special Committee

The Nigerian Education Loan Fund is established by Section 5 of the Act to be domiciled and administered by the Central Bank of Nigeria through deposit money banks for the implementation of the provisions of the Act. The aims and objectives of the Fund include the facilitation of the mobilisation of funds to provide interest-free loans to indigent students of higher institutions of learning in Nigeria for the payment of their tuition and the facilitation of the constant supply of loans to qualified students to the end that all Nigerians may have access to education.^[8]

The principal functions of the Fund include the implementation of the provisions of the Act; the supervision, coordination, administration and monitoring of the management of student loans in Nigeria; receipt and processing of applications for loans to ensure compliance with the provisions of the Act; approval and disbursement of loans to qualified applicants in accordance with the laid down procedure; monitor the academic records of grantees to ascertain their years of graduation, mandatory service and employment in order to facilitate the repayment of the loans; liaise with the employers of grantees to expedite the deduction of specified sums from their salaries for the repayment of the loans; provide financial advice on educational matters to relevant stakeholders, issue a quarterly report to the President on the performance of student loans and perform such other functions as may be relevant and necessary to the realisation of the objectives of the Act.^[9]

By Section 12 of the Act, the sources of the fund comprise education bonds, education endowment fund schemes, one per cent of all profits accruing to the Federal Government from oil and other minerals, one per cent of all taxes duties and levies accruing to the Federal Government from the Federal Inland Revenue Service, the Nigerian Customs Service and the Nigerian Immigration Service; or such other revenue accruing to the fund from any other source.

Section 7 of the Act establishes a Special Committee for the Fund, to be set up by the Governor of the Central Bank,^[10] charged with the responsibility of executing the functions of the Fund. The composition of the Committee is to consist of a Chairman, being the Governor of the Central Bank, a Secretary, whose appointment is to be made by the Chairman at his pleasure,^[11] the Minister of Education, the Chairman of the National Universities Commission, the Minister of Finance or his representative, the Auditor-General of the Federation, a representative of the following

1. the Vice-Chancellors Forum of all Nigeria Universities.
2. the Rectors Forum of all Nigerian Polytechnics
3. the Provosts Forum of all Colleges of Education in Nigeria
4. the Nigerian Labour Congress
5. the Nigerian Bar Association
6. the Academic Staff Union of Universities.

The tenure of office of the above members is to lapse with their tenure in their substantive offices and the successors appointed for their substantive offices are to replace them in the Special Committee.^[12] Notwithstanding the foregoing, a member of the Committee will cease to hold office where such member becomes bankrupt, dies, becomes of unsound mind or becomes incapable of discharging his duties, is convicted of a felony or any offence entailing dishonesty or fraud, is found guilty of serious misconduct in relation to his duties or resigns his appointment by notice in writing to the president. However, where a vacancy exists in the Committee as a result of any of the above, the Act provides that such vacancy is to be filled by the next in rank to the affected member pending the appointment of a substantive successor.^[13] It is expedient to note that the decisions of the Committee are subject to the overriding powers of the President and the President may give further directions as he thinks fit, being satisfied that same is in the interest of the public or even the Committee.

Qualification and Application for Loan under the Act.

By the provisions of the Act, a person is not qualified to apply for loan under the Act unless such person has secured admission into any Nigerian institution of higher learning established by either the Federal or state governments; his income or his family income must be less than #500,000 per annum; he has provided two guarantors each of whom must be either a civil servant of at least level 12 in service, a lawyer with at least 10 years post-call experience, a judicial officer or a justice of the peace.^[14]

Every loan application is to be accompanied by a copy of the student’s admission letter, a letter by the guarantors addressed to the Chairman of the Special Committee recommending the student for the loan and stating that such guarantor accepts liability in the event of default, two passport photographs from each of the guarantors, their employers’ names as well as an evidence of being employed in the stated organisation or where the guarantor is self-employed, the particulars of his/her business registration with CAC or such other relevant organisation and the particulars of his bankers; are to be submitted through the applicant’s bank to the Chairman of the Committee.^[15] The application is also to be accompanied by a cover letter signed by the Vice-Chancellor, Rector or other appropriate head of the relevant institution as well as its Student Affairs Officer.^[16] Upon receipt of the application, the Committee is mandated by the Act to communicate with the applicant on the status of his application within 14 days of such receipt.^[17]

Further to the above, the Committee is under a further duty to process the application and disburse the funds to the applicant within a period of 30 days of the receipt of the application by the Chairman.^[18]

Disqualification

A student is disqualified from the loan scheme if he is shown to have defaulted under any loan arrangement grated him by any organisation, has been convicted of a felony, or other offences involving fraud or dishonesty or drug-related offences, or has been found guilty of exam malpractices by any school authority. Additionally, if either of the parents has defaulted in respect of loans granted to the person, the student is disqualified.^[19]

Repayment of the Loan

The Act further provides for a repayment structure for loan facilities granted under the Act. A beneficiary of the loan scheme is expected to commence repayment two years after the completion of his mandatory National service^[20] and such repayment is to be by a 10% deduction to be made from the salary of the beneficiary by his employer and credited to the NELF^[21] and where the beneficiary is self-employment, he is mandated by the Act to remit 10% of his monthly profit to the NELF.^[22] Where a beneficiary changes his job, such change is to be communicated to the Chairman of the Special Committee within 30 days of resumption at the new job and he must provide the relevant details of the job.^[23] Moreover, in the case of a beneficiary who is self-employed, he is mandated, within 60 days of becoming self-employed, to submit all relevant information on the business such as the name, address, registration documents (where registered) name of bankers, partners, directors, shareholders, etc., to the Special Committee.^[24] Failure to submit this information will impose a liability of #500,000 in fine or a term of two years imprisonment or both.^[25]

Miscellaneous Provisions.

The Act renders applicable, the provisions of the Public Officers Protection Act to any Suit commenced against any member or officer of the Special Committee and such Suit cannot be validly commenced unless a pre-action notice of one month is served on the committee by the prospective claimant or his agent.^[26] Such notice is to state the cause of action, particulars of the plaintiff’s claim, his name and address as well as the reliefs sought by him.^[27] The service of Court Processes or other documents may be made by delivery to the Secretary of the Committee or delivery to the head office of the Central Bank of Nigeria, with same addressed to the Secretary of the Committee.^[28]

Furthermore, an annual report prepared not later than four months after the end of the year under reference is mandated to be prepared and submitted to the President detailing the activities of the NELF and its administrative committee as well as its audited account containing the auditor’s comment.^[29]

IMPLICATIONS OF THE ACT ON THE NIGERIAN EDUCATIONAL SECTOR

The Student Loan Act has several implications for the Nigerian Educational sector. While some of these may have a positive outlook, others may hinder the effective realisation of the objectives of the Act. These will be examined anon.

To begin with, a fundamental objective of the Act which is to improve access to higher education for indigent students can be achieved with a proper implementation of its provisions. Thus limited financial capabilities will no longer be a deterring factor from pursuing better career prospects and economic opportunities. The effect of the Act also has the potential to reduce the financial burden of indigent students while in school, thereby allowing needed focus on their academics. What is more, the flexible repayment plan allowed by the Act affords the beneficiaries of the loan adequate time to pay off same, while the low rate of deduction from their salaries or incomes will ensure that the repayment does not affect their means of livelihood significantly.

Nevertheless, the Act has the potential to also create some difficulty in the educational loan scheme thereby impeding the fundamental reason for its enactment. For instance, the requirements of the Act have been considered to constitute a barrier to accessing the loan facility by genuinely indigent Nigerian students. Requiring the production of 2 guarantors of level 12 who would be willing to take such responsibility for repayment in the event of default is rather unrealistic in the present economic condition of the nation.^[30] Moreover, if the objective of the Act was to make higher education accessible to the indigent then one can conclude that the scope is rather narrow. This is because the loan scheme under the Act covers only the tuition, leaving out other expenses, which are ancillary and are equally capable of hindering access to higher education and thereby limiting career prospects. In addition, the income threshold required by the Act for eligibility for the loan facility may leave out the indigent students who are most in need of the loan facility.

CONCLUSION.

Overall, it is important to note that the Act is relatively nascent; it is too early to feel its full impact. It is however, believed that with the necessary institutional apparatus put in place with a framework that is flexible enough to address challenges, which may be encountered, the Act can be of great benefit to its intended targeted audience.

1. Gift ChapiOdekina, ‘Student Loan: NELFUND Set For Takeoff as FG inaugurates Board’ (VANGUARD, 2024) available at https://www.vanguardngr.com/2024/02/student-loan-nelfund-set-for-takeoff-as-fg-inaugurates-board/ accessed on the 20^th of February 2024. ↑
2. Section 22. ↑
3. See the Long Title to the Act. ↑
4. Section 1 of the Act. ↑
5. Ibid. Section 2. ↑
6. Ibid. Section 3. ↑
7. See Section 4 of the Act. ↑
8. Section 13 of the Act. ↑
9. See Section 6 of the Act. ↑
10. See Section 5(3) of the Act. ↑
11. See the proviso to Section 8 of the Act. ↑
12. Section 8 of the Act. ↑
13. Section 9(2) of the Act. ↑
14. Ibid. Section 14. ↑
15. Section 16(2) of the Act. ↑
16. Section 16(1) of the Act. ↑
17. Section 16(3) of the Act. ↑
18. Section 17 of the Act. ↑
19. Section 15 of the Act. ↑
20. Section 18 (1) of the Act. ↑
21. Ibid Section 18(2) ↑
22. Ibid Section 18(4) ↑
23. Section 18(3) of the Act. ↑
24. Ibid. subsection 5. ↑
25. SS.6 ↑
26. Section 20 of the Act. ↑
27. Ibid. ↑
28. Section 20(4). ↑
29. Section 21 of the act. ↑
30. Adamu Rabiu, ‘Nigerian Student Loan Act: A Law Unfit for Purpose’ (PREMIUM TIMES, 2024) available at https://www.premiumtimesng.com/opinion/655977-nigerian-student-loan-act-a-law-unfit-for-purpose-by-adamu-rabiu.html accessed on the 20th of February, 2024. ↑