1. INTRODUCTION

Education is the key every national development, it will not be a gain saying that no nation can have access to development, be it political, economic, social and whatever. when it has no access to education most especially to the youths of the country, who are inevitably the future of that nation and more often have more population of the total citizenry. Indeed, Education is the catalyst to all round development through which one and nation as whole can overcome ignorance, tribalism, poverty and even insecurity. Nelson Mandela argued that ‘Education is the most powerful weapon which you can use to change the world’ taken it to a narrower scope, one can say education is the most powerful weapon which we can use to change Nigeria. In transforming Nigeria from its current unwanted situation, what we need is education. An access to education is indeed an access to personal and national development. Any nation that knows what is better for it will prioritize education and put all efforts to make sure that everyone has access to education despite their social class and or financial status. That is to say a better nation is a nation with a better and flexible education system that everyone can afford to go to school with the quality of the education uncompromised.

Education is made free of charge for all and sundry in some countries, while in other countries there are some systematic approaches put in place to make the education accessible to the large number of the citizens, if not for all, be it a scholarship, education grant, allowance or loan schemes. Nigeria is not an exception in this trial. Thus, this work briefly overviews the major provisions of the newly enacted Students’ Loan Act 2024 with the view of shedding more lights on the most relevant provisions of the Act to the fingertips of every interesting student. In an attempt to appreciate the strength or otherwise of the Act, references to the previous similar laws most especially the repealed Students’ loan Act 2023 will be inevitable.

2. THE BACKGROUND OF THE STUDENT’S LOAN ACT 2024

The new Student Loan Act 2024 also known as Access to Higher Education Act, 2024 (hereinafter to be simply referred to as the ‘New Act’ to ease reference), aimed to provide more access to Higher Education in Nigeria by addressing some of the major challenges of the previous Student Loans Act 2023 (to be referred to as the ‘Repealed Act’ after now for easier reference). The identifiable Challenges of the repealed law includes but not limited to poor governance and management of loan fund, purpose and scope of the loans, strict eligibility criteria of applicants, rigorous and inflexible method of application, unfavourable repayment and recovery of the loans’ provisions. It is obvious the new Act came to cure the diagnosed loopholes brought by the repealed Act barely a year after it enactment on Monday, 12th June 2023. Obviously, the primary objective of the Act is to make higher education more accessible to Nigerians through students’ loans, with the goal of providing quality education to Nigerians with less financial burden.

The Students Loans (Access to Higher Education) (Repeal and Re-Enactment) Act, 2024 was an Executive Bill to repeal the Student Loans (Access to Higher Education) Act 2023. The Bill was passed by the Senate and the House of Representatives of the National Assembly on Wednesday, 20th March 2024 and subsequently signed into law by the President on 3rd April 2024. The expediency of the processes of the new Act’s enactment is very commendable considering the facts that bills such as this that are for the benefit of the masses are traditionally lingered for many years before they may finally find a way to be assented and became law. The bill for the repealed Act lingered in the National Assembly from 2016 to March-2023 barely good 7 years in process. The new Act repealed the Students Loans Act 2023 which in turn repealed the Nigerian Education Bank Act 1993. The Nigerian Education Bank Act repealed the Students Loans Board Act 1990.

3. ELIGIBILITY OF APPLICANTS

The criteria of eligibility of the applicant are made very flexible, unlike the criteria under the repealed Act which were to some extent unnecessarily strict. A student was disqualified to get the loan if his parent’s income was more than N500,000.00 per annum. It also disqualified any applicant whose parent had previously defaulted on any loan. However, the new Act also designed new eligibility status of student applicant. The section 23 of the new Act deals with eligibility of applicants and provides that an applicant must first be a citizen of Nigeria, have secured admission into any university, polytechnic, college of education school established by the Federal Government or State Government, or a vocational or skills acquisition school licensed by the Federal Government; but the new Act disqualifies beneficiaries of any loan or other scholarship scheme from the Federal Government or any of its agencies. Therefore, only Nigerian student in any tertiary institutions, vocational or skills acquisition schools whether established by state or Federal government and not a beneficiary of any government loan scheme can be eligible for the loan. 

It can be observed that, by the wordings of the provision, students in private tertiary institutions, vocational or skills acquisition schools (not established by either state or federal government) are disqualified. This view becomes more open under the interpretation section of the of the new Act (section 36) where it defines “institutions of higher learning” to mean: public universities, polytechnics, colleges of education and vocational schools approved by the Board. then “loan” means loan to be granted to qualified students of Federal institutions of higher learning in Nigeria; and “Student” means an applicant who has a valid admission into a Federal Institution of Higher Learning. It may be argued that the provision that disqualifies students of private institution across the nation, is discriminatory at glance. However, going by the objectives of the loan scheme entirely which is meant to assist the students that cannot afford the minimal tuition fees of the government institution which are considered very cheaper compared to private institutions. Thus, the presumption that a student of private institution is above the minimum level of the loan eligibility may be justifiable.

There is also no age barrier in the eligibility criteria at all under the new Act, the issue is a minor does not in the eyes of law possess the capacity to enter into a valid and enforceable contract. Many students are getting admission tertiary institutions at a very tender age, such student may be granted the loan. The problem that may arise is that the government cannot enforce the loan contract against the student even if he has attained the age of majority at the time of the commencement of the action except if the student rectified the contract upon attainment of the age of majority. It is hereby submitted that age should be part of the criteria and there should be a clause for guardianship in the case of a minor applicant.

4. LOAN APPLICATION PROCESS

One of the distinctive features of the new Act is its flexible application procedure as against the procedures under the repealed Act, under which an applicant has to apply through his bank by submitting his cover letter signed by the vice-chancellor, rector or head of the institution and the dean of students’ affairs accompanied by his admission letter, with two guarantors and their business details (where self-employed), recommending the applicant for the student loan and accepting the liability. It is worth noting that under the repealed Act it was not everybody that can stand as a guarantor, some criteria and qualifications were designed which have also made application process under the repealed Act not an easy task for all applicants.

The new law seems to have paved way to flexibility in the application procedures by stating under sub-section (c)  of section 23 that applications shall be made in the form and manner prescribed by guidelines to be issued by the Board from time to time. Consequently, the Board is empowered to make specific regulations regarding the method and process of loan applications and the criteria for granting loans in each financial year. This new regime permits adoption of suitable methods and procedures of loan applications as circumstances may warrant.

5. FUNDING AND MANAGEMENT OF LOAN

The new Act establishes General Reserve Fund which is meant to be the funding body of the entire loan schemes under the new law by receiving 1% of all taxes, levies and duties collected by the Federal Inland Revenue Service, and accruing to the benefit of the Federal Government of Nigeria; all sums which may from time to time be appropriated to the Fund by an Act of the National Assembly; repayment of capital and interest on any loan granted by the Fund; investment income of the Fund; monies from education bonds or other debt instruments; monies from the Federal Government of Nigeria, as may be directed and approved by the President; all sums collected as charges and fees by the Fund in the course of discharging its functions under this Act; all sums accruing to the Fund by way of donations, gifts, grants, and endowments. 

The loan covers tuition and other fees payable to the school on one hand as well as maintenance allowance payable to the student on the other as stated under Section 27 of the new Act. Thus, unlike the repealed Act where the loan only covers tuition fee, an applicant will be given a maintenance allowance directly to his personal account under the new Act. Obviously, the learned drafters of the new Act put into consideration that tuition fee may not be the only problem to a student in the current economic hardship, but also need some pocket money for their up keep on campus.

6. REPAYMENT OF LOAN

The grant to applicants is as loan, thus there should be provisions for repayment (settling the loan’s liability). As expected, the new Act includes provisions for repayment, but the provisions were also attempted to be flexible, aiming at easing the financial burden on applicants.  Under the New Act, repayment of the loan shall be by monthly deductions not exceeding 10% of the beneficiary’s gross income until the loan and all charges are repaid to the Fund. The repayment may be delayed until two years after the completion of the National Youth Service Corps (NYSC) programme, that means at least three-years after graduation from the course for which the loan was sought and obtained. This provision is commendable as it attempts to provide for an ample time for debtors to save for themselves, before they will start the repayment and the new Act also gives room for an extension of repayment where the beneficiary is unemployed. It should be noted that the Fund can only initiate and action for the recovery of the loan against any debtor after the expiration of the above stated period of time without commencement of the repayment. (see generally section 28 of the new Act)

In an attempt to make sure of the repayment, the new Act mandates all employers to inquire the loan status of their prospective employees from the fund. Any employer who is informed that their employee is a beneficiary of student loans from the Fund who has not completed repayment, is mandated to provide such information as the Fund may require to initiate collection of the loan and any charges from the employer. Failure to do so amounts to a criminal offence, thus any individual, employer or a director or officer of a corporate employer who is involved in contravention of these provisions is guilty of an offence and shall be liable on conviction to a fine of not less than N2,000,000 or imprisonment for a term of not less than one year or both. Surprisingly, the New Act does not impose any duty on the debtor to make sure that his future employer complies with the provisions of the law. The debt status of the potential employee is best known to him. why shouldn’t him be bound by law to identify himself as such in the cause of employment? The Act does not also provide for the situation where the employer is government or any of its agency. It is pertinent to state that the new Act empowers the Fund to waive repayment of the loan for the debtors that it considers incapable. 

Notwithstanding the good part of the repayment provisions, they are not free from some loopholes that the learned drafters of the new Act should put into consideration. The Act only provides commencement of repayment two years after NYSC while it is not everyone that will be eligible to participate in scheme after graduation either because of age, health or any other issue that law permits one to be exempted. And graduating students may be willingly delay joining the NYSC to buy time unnecessarily for the repayment. Moreover, the scheme is only mandatory if one wants to be employed in Nigeria. It is submitted that the Act should rather provide for repayment to commence four-years after graduation and not two years after NYSC to avoid ambiguity since it is not everyone that participates in the scheme.

The Act mandates repayment monthly by at least 10% of monthly income of both employed and unemployed persons, there may be no problem in the case of employed persons since their employers are mandated to be deducting the percentage directly for the repayment and there is statutory minimum wage upon which the employer must be paying his employees. But an unemployed person may be earning a very minimal amount that cannot sustain him for the month rather than repaying loan. It is submitted that the Act should have provided for the minimum income of the unemployed that can be subjected to repayment which should be equivalent to the minimum wage at the point in time. It will not be equity to subject an unemployed person that is earning less that the minimum wage to the same scheme of an employed and unemployed persons that are earning the minimum wage and above.

It is also worthy of observing that the students’ loan under the new Act is not meant to be interest free loan, though the act is not express on this and there is no mention of the quantum of the interest anywhere in the Act. The Act lists payment of interest on loans granted as a funding source for the Education Loan Fund and also mentions repayment of loans and “all charges” in Section 28 (3) dealing with repayment. It may be submitted that these imply that the loans will not be interest free. However, the act lefts students in shreds without explaining the quantum of the interest if really there is one, so that the students will get to know the nature of the contract they are signing with the Fund. And if it is really meant to be interest free. The above-mentioned provisions should be amended and provision similar to section 13 of the repealed Act ought to have been inserted which provides thus, ‘the loans are interest free’.

7. SOME OTHER NOTABLE CHANGES IN THE 2024 ACT AGAINST THE REPEALED ACT OF 2023

The new Act establishes Education Loan Fund as a separate corporate entity, distinctive from its principal (the federal Government) which can sue and be sued in its name. Students’ loan was recently only covering tuition fees, but the new Act covers tuition and other fees payable to the school as well as maintenance allowance payable to the student. The scope of the loan also covers students in vocational schools established by the Federal and State Governments (but licensed by the Federal Government) In addition to students of tertiary institutions.

Annual income is no longer a qualification for the loan eligibility, the new Act seems to be open to anyone and not indigent students only. It also dispenses with the requirement of two loan guarantors which was present under the repealed Act. The repealed Act disqualifies any applicant whose parent had previously defaulted on any loan. The 2024 Act removes this provision but then disqualifies beneficiaries of any loan or other scholarship scheme from the Federal Government or any of its agencies.

  Notably, the new Act empowers the board to make exemptions for loan repayments; in cases of death of the beneficiary, hardship, for reasons of equity, where it is impossible to recover the loan or where the cost of recovery exceeds the amount being sought. This is commendable provision because it gives room for protection to vulnerable persons that are in hardship and not be able to pay back the loan, and also not to put hardship on deceased estate in cases of death. However, the provision could give way to abuse if not properly managed or if the there is no established criteria for determination of hardship and/or equity.

CONCLUSION AND RECOMMENDATIONS 

The importance of education to a nation, most specially a developing nation like Nigeria can never be over emphasized. Access to education for all and sundry is a prerequisite for having educated human resources from all and sundry of the country. Owing to that importance and the invaluable significance of education to a nation and the economic reality of this country, where the majority population of the citizens are poor and living from hands to mouth, earning averagely below the minimum wage. Who are apparently not in financial status to afford the education of their children most especially at the tertiary levels and higher vocational trainings.  Therefore, it will be very pertinent for the government to put in place some mechanisms and schemes like loans and scholarships that will mitigate situation. That is why the new Act of 2024 can be considered a good law, giving access to education for everyone by granting loans to students which covers both their tuition fees and maintenance allowance for the up keep and welfare of the students except some lacunae we have identified based on our foregoing discussion. 

  It is true that no law could ever attend a position of perfection but there is always room for improvement through amendment and effective implementation. Thus, the following recommendations;

1. Eligibility for the loan should be either based on applicant’s financial need or academic merit or both and not available to all students who wish to borrow. Also there should be provisions specially for women or persons with disabilities, so that the class of people targeted by the Act should be the major beneficiaries of the Scheme. 

1. The Act obviously attempts to make inclusion of everyone, however, there should be a provision that will mandate the board to comply with Federal character regulations in the allocation of the load funds.

1. There should be clear provision as to whether the loan is interest free and if not, there should be clear provisions on the quantum of the interest.

1. While the minimum age required for tertiary institution in Nigeria is 17, under our jurisdiction the age upon which a child can validly enter into a contract except contact of necessity or that of his benefit is the age of 21 and above. There should be need for endorsement of any applicant’s guardian who is a minor.

1.   Considering the high competition in the labour market, that there is an increase in waiting period for graduates to secure employment in Nigeria. The grace period for repayment should be increased to four years to enable fresh graduates secure jobs or establish a business with the skill acquired.

1. Imposing prison sentence on the employer who was not even a party to the loan agreement without imposing any punishment on the employee, who after being the debtor, refuses or fails to repay the loan after securing a job is not equitable nor justifiable (especially at this time when non-custodial measures preferred worldwide as a better approach in sanctioning). Our humble recommendation here is, as civil transaction as the loan it is, the law should be amended to shift the liability of the repayment of debt with all interest to the employer who refused or neglected to comply with provisions of the law. It is our humble view that this will be more equitable than imposing criminal sentence on civil liability. i.e. recovery of debt. 

Article written by: Alkasim Abubakar