The United Nations Educational, Scientific and Cultural Organization (UNESCO) Convention held on 14 December 1960 (Convention Against Discrimination in Education) included education as a fundamental human right.  As a rectified member, Nigeria has since adhered to this stipulation, as evident in Chapter Two (18- a,b,c, and d) of the 1999 Constitution of the Federal Republic of Nigeria and other domestic laws such as the Universal Basic Education Act.

On June 12, 2023, President Bola Ahmed Tinubu signed the Student Loan Act in fulfillment of one of his campaign promises. As positive as this development may sound, this is not the first time such a policy has been introduced in Nigeria. In 1993, the Nigerian Education Bank Act was proposed and tasked with disbursing loans for educational purposes and other education-related matters.  Also, during the  Gowon administration in 1972-80, a federal student loan system was introduced (Decree No. 25) to provide students with funds for tuition, dues, and other academic expenses with a repayment period of up to 20 years.

Throughout the history of student loan schemes in Nigeria,  implementation, sustainability, and loan recovery have continued to challenge their effectiveness, as seen in the Student Loan Decree No. 25 of 1972. However, the question arises: Will the Tinubu administration's student loan policy prove different?

The remainder of this insight note will analyze the recent student loan law, exploring its challenges and demographic impact on the labour force. The insight note will give an understanding of the effect of student loans on demographic groups. It will also provide valuable insights into the possible outcomes for policymakers, educators, and students.

The Student Loan Law

President Bola Tinubu approved the student loan law within two weeks of assuming office. The primary objective of introducing this loan is to provide disadvantaged Nigerian students with easy access to tertiary education through interest-free loans sourced from the established Nigerian Education Loan Fund, as captured in the Act. According to the document, funding sources for the loan comprise education endowment fund schemes, education bonds, and one percent of all taxes, levies, and duties accrued to the government by income-generating government organizations like the Federal Inland Revenue Service (FIRS), the Nigerian Immigration Service, and the Nigerian Customs Service. It also consists of one percent of profits from the oil and other mineral sectors, gifts, grants, and additional revenue from other sources. The fund will be managed by the Central Bank of Nigeria (CBN) through a committee headed by the CBN governor and will cover tuition fees only.

Students can apply for a loan by presenting a cover letter signed by the rector, vice chancellor, head of the institution, or the school's student affairs and submitted to the committee chairperson. However, to apply, students must meet the following eligibility criteria:

• Secured admission into any federal or state-owned university, polytechnic, college of education, or government-run vocational establishment.  
• Provide documents such as admission letters,  recommendation letters from two guarantors, two passports, and a copy of the surety's business registration (if self-employed).
• Come from a low-income background with an annual income of less than N500,000 or N42,000 monthly.
• Provide two sureties who must either be a lawyer with at least ten years of post-call experience, a level 12 public servant, a judicial officer, or a magistrate.

The law provided conditions for people that do not qualify for the loan; it included

• People with a record of loan defaults.
• Students found guilty of examination malpractice.
• Students convicted of crimes such as fraud, robbery, kidnapping, and murder, among others.
• Convicted drug offenders
• Students whose parents are loan delinquents.

Upon fulfilling the criteria above, the committee acknowledges the application within two weeks. Disbursement is expected to commence one month from the application date.  The student is expected to start repaying the loan twenty-four months after completing the National Youth Service via a ten percent deduction from their monthly salary.

If the loan recipient is self-employed, 10% of their monthly profits will be remitted to the Fund, and details of the business (business name, address, registration documents, among others) will be submitted to the committee within 60 days of attaining repayment status.

The loan law also recommended a jail term of 24 months, a N500,000 fine, or both in case of a loan default.

Perceived Issues with the Student Loan

Following the signing of the Student Loan Act, the Federal Ministry of Education announced that the government could no longer fund tertiary education in Nigeria. This announcement preceded a gradual increase in tuition fees in most federal and state-owned higher institutions in Nigeria.  

Concerns about the loan dragging millions of Nigerian students into debt after graduation remain. Some argued that the loan needs to paint the reality of a  Nigerian student on average, precisely the eligibility criteria of N500,000 annually or N42,000 monthly. Considering the N30,000 minimum wage in Nigeria and assuming both parents earn the minimum wage, a combined wage of N60,000 monthly and N720,000 annually, which is higher than the N42,000 monthly and N500,000 annual eligibility criteria, raises concerns about the effectiveness of the loan on the targeted population.

Also, the nature of the guarantors required is considered a constraint on the loan's effectiveness. There is a high chance that students of that income level will not have a relationship with the calibre of guarantors required.

Finally, in light of how inaccessible heads of institutions in Nigeria are to students, the bureaucracy involved in gaining access to a school's vice chancellor or provost to obtain a cover letter constitutes a problem for the applicant.

Demographic Effects of Student Loan Law

Aside from the concerns above, the effect of the student loan on demography exists. Nigeria, with a population of over 200 million people and a mean average age of 17.2, shows that 70% of the population is young. A further breakdown shows that the average age of students in higher institutions is between 16 and 25+ years.

Data from the Federal Ministry of Education reveals that Nigeria has 170 accredited universities and 137 polytechnics, as well as 89 colleges of education. Of the universities, 43 are federal universities, and 47 are state-owned. While 39 of these polytechnics are federal, 43 are state-owned. Also, out of the 89 colleges of education, 22 are federal, and 47 are state-owned.  These figures constitute a large base for young people in the schooling system.  Notably, the minimum age for getting into tertiary institutions in Nigeria is 16 years, going by the 6-6-4+ school formation.

Figure 1 below shows the annual admission numbers into various categories of higher institutions in Nigeria over the last 11 years (2008-2020).

Figure 1: Number of Admitted Students Across all Higher Institutions by Year

Figure 2: Admission Breakdown by Institutions 2020

Figure 2 above shows the number of students admitted into specific higher institutions in 2021. Reports indicate that at least 18% of admitted students across all tertiary institutions drop out annually. This percentage will likely increase with the implementation of the student loan.

The signing of the Student Loan Policy Act and the Federal Ministry of Education's corresponding announcement triggered a tuition fee hike. This will likely increase the percentage of students dropping out, considering the economic background of most students in public institutions.

Moreover, any increase in the percentage of college dropouts will expand the labour force, raising the youth unemployment rate. According to the National Bureau of Statistics report for Q2 2023, the unemployment rate among youth aged (15-24)  is 7.2%, meaning more jobs are needed to accommodate the current labour force or expansion in the labour market. Expanding the labour force without a corresponding increase in youth employment implies that dropouts who cannot secure employment will find alternative means of sustaining themselves, presenting a high risk of engaging in criminal activities.

Conclusion

While disbursement of the student loan is expected to commence soon, the government needs to devise a control measure to avert any hike in tuition fees resulting from the loan policy. Also, it needs to consider the correlation between not continuing with the funding of public higher institutions, an increase in dropout rates, labour market expansion, youth unemployment, and crime when executing the student loan policy.

References

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Federal Republic of Nigeria. “Chapter Two- 1999 Constitution of Nigeria.” [https://constitution.lawnigeria.com/2018/03/27/chapter-two-1999-constitution-of-nigeria/]

Policy and Legal Advocacy Centre (PLAC). “The Complete 2004 Laws of Nigeria.” [https://www.placng.org/lawsofnigeria/view2.php?sn=361]

Government-Gazette. “STUDENTS LOANS BOARD DECREE 1972.” [https://archive.gazettes.africa/archive/ng/1972/ng-government-gazette-supplement-dated-1972-07-06-no-32-part-a.pdf]

Federal Republic of Nigeria. “STUDENTS LOANS (ACCESS TO HIGHER EDUCATION) ACT, 2023.” [https://www.channelstv.com/wp-content/uploads/2023/06/STUDENTS-LOAN-ACCESS-TO-HIGHER-EDUCATION-ACT-2022.pdf]

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National Bureau of Statistics (NBS). “Nigeria Multidimensional Poverty Index (2022).” [https://nigerianstat.gov.ng/elibrary/read/1241254]

Worldometer.  “Demographics of Nigeria.” [https://www.worldometers.info/world-population/nigeria-population/#:~:text=The%20median%20age%20in%20Nigeria%20is%2017.2%20years.]

USAID. “Educational attainment, at least Bachelor's or equivalent, population 25+, total (percentage) (cumulative).” [https://idea.usaid.gov/cd/nigeria/education#tab-tertiary-education]

Federal Ministry of Education. “List of Institutions.” [https://education.gov.ng/government-universities/]

Punch. “Stakeholders differ on 16-year minimum age for UTME candidates.” [https://punchng.com/stakeholders-differ-on-utme-16-year-minimum-age/]

Joint Admission and Matriculation Board (Jamb). “Titbits at the 2021 Policy Meeting.” [https://www.jamb.gov.ng/Speeches-Presentation/POLICY_2021.pdf]

Business Day. “Improving the quality of tertiary education in Nigeria.” [https://businessday.ng/opinion/article/improving-the-quality-of-tertiary-education-in-nigeria/#:~:text=The%20sorry%20state%20of%20tertiary,in%20Nigeria%20is%20over%2018%25.]

National Bureau of Statistics (NBS).   “Nigeria LaboThe United Nations Educational, Scientific and Cultural Organization (UNESCO) Convention held on 14 December 1960 (Convention Against Discrimination in Education) included education as a fundamental human right.  As a rectified member, Nigeria has since adhered to this stipulation, as evident in Chapter Two (18- a,b,c, and d) of the 1999 Constitution of the Federal Republic of Nigeria and other domestic laws such as the Universal Basic Education Act.ur Force Survey Q2 2023.” [https://nigerianstat.gov.ng/elibrary/read/1241429]