Impacts of the Student Loan Act on Education: Examining Its Prospects and Problems
OVERVIEW OF THE STUDENT LOAN ACT
The Student Loan Act1 was passed into law by the incumbent President, Asiwaju Bola Tinubu on the 12th of June, 2023.2 It was aimed at providing a hitch-free access to tertiary education for indigent Nigerians.
That singular act of signing the Act by the President is laudable and commendable. It is trite in law that the government is saddled with the responsibility to direct its policies towards ensuring equal and adequate educational opportunities at all levels in the country.3
This essay seeks to examine the prospects and deficiencies of the just-signed SLA 2023 as well as shed light on its impact in tertiary education in Nigeria.
The loan fund is expected to handle all loan requests, grants, disbursement and recuperation of the loans provided.6 The Central Bank of Nigeria (CBN) is empowered to ensure the effective administration and management of the loan fund through money deposits in banks within Nigeria.
Moreover, student loans are not a new endeavor in Nigeria. Between the periods of 1970 and 1980, Yakubu Gowon, introduced federal student loans with a payment period of 20 years. The decree gave students funds for their tuition, dues, and other expenses approved by their schools.7
Ultimately, in the global world, student loan is seen as a poverty alleviation tool which is in line with the Sustainable Development Goals (SDGs), Goal 1 & 4. Countries operating student loans across the globe include the United States, Canada, South Africa, Kenya, Rwanda, United Kingdom and to mention a few.
Prospects of Student Loan Act 2023
A positive impact of SLA 2023 is the attempt at solving, resolving and dissolving the challenges in the access to tertiary education in Nigeria. Some scholars opined that the student loan could potentially impact the educational sector in Nigeria.
They argued that access to financial aid through student loans can make education more affordable for students who might not have the means to pay for the expenses upfront. This can facilitate more students becoming graduates thereby creating a plethora of educated graduates in the country.
An educated workforce will lead to enhanced growth, innovation, increased productivity and competitiveness in the global market.
Subsequently, it can create a pathway for upward mobility. Bridging the estranged gap between socioeconomic classes will facilitate diversity in tertiary education. Additionally, student loans can provide an incentive for students to complete their education as they would be motivated to repay their loans once they secure employment. This could contribute to a more skilled workforce and overall economic development.
Problems With Student Loan Act 2023
It would be expedient to establish that the Act has the potential to a new era of educational access and empowerment. Despite these prospects, there are several challenges which can undermine its prospects.
Taking a careful perusal of the act, it is conspicuous that SLA 2023 is not one for posterity. Its sources of funding as dictated by the Act include; one percent of all profits accruing to the federal government from oil and other minerals; 1% of taxes, levies and duties accruing to the federal government from the Federal Inland Revenue Service (FIRS), Nigeria Immigration Service (NIS) and Nigerian Customs Service (NCS); education bonds and education endowment fund schemes.8
The Act lacks a detailed strategy for the sustainability and growth of the Nigerian Education Loan Fund! It lacks a long-term roadmap for expanding the fund’s resources and attracting investments either locally or internationally.
Going further, the Act focuses solely on the payment of tuition fees. It neglects important expenses such as accommodation, stipends, transportation and other living costs. The delimitation of the Act to tuition fees alone does more harm than good rather than provide succor to aggrieved students. Moreso, it is perceived as a precursor to increase tuition fees in tertiary institutions.
Similarly, a major concern is the potential rise in student debt. While the SLA 2023 aims to provide financial aid, it may lead to an increase in student loan burdens, which can have long-term consequences on graduates. It can lead to financial stress if graduates are unable to secure high-paying jobs after graduation which will invariably hinder economic development.
The SLA 2023 has the potential to increase access to education and improve prospects for students, but it also raises concerns about increasing student debt and the affordability of education in Nigeria.
Nigeria’s unemployment rate stands at a prohibitive 33% as of 2020, and it is projected to increase to 40.6% according to KPMG’s estimates, compared to the 2019 rate of 37.7%. Given these circumstances, the ability of Nigerian students to repay their loans becomes far-fetched in the absence of job opportunities.
Truthfully, the educational sector is faced with loads of problems and payment of tuition is arguably not a low-hanging fruit. There are strategic issues that need to be addressed.
Even with the availability of student loans, there are concerns about incessant strike action from unions like the Academic Staff Union of Universities (ASUU) and other related bodies, access to improved standards of teaching, an advanced curriculum, and adequate infrastructure, inter alia.
It is therefore important to strike a balance between providing financial support and addressing the challenges associated with student loans to ensure a sustainable and equitable education system. Without addressing these challenges, the core purpose of education may be compromised.
Image Credit: Premium Times Nigeria
Rofiat Popoola is a law student at the prestigious University of Ilorin, Nigeria. She is pursuing a bachelor’s degree in Common Law. She is an ardent writer and researcher who prides in writing on contemporary issues affecting her country as a whole. She joined LawGlobal Hub in January, 2023.
- Hereinafter referred to as SLA 2023
- See SLA 2023, section 1 & 2
- See section 18 of the CFRN, 1999 as altered
- Constitution of the Federal Republic of Nigeria 1999 (as altered)
- See SLA 2023, section 5
- See section 6 of supra.
- “What Tinubu’s Student Loan Act means for the Nigerian people | TheCable” https://www.thecable.ng/what-tinubus-student-loan-act-means-for-the-nigerian-people/amp. See also the Nigerian Education Bank Act Cap. N104, Laws of the Federation of Nigeria, 2004
- See SLA 2023, section 12