FEATURES: THE STUDENT LOAN SCHEME: IS IT THE OPTIMAL SOLUTION?

By Kolade Olakiitan

The Access to Higher Education Act, 2023, also known as the Student Loans Act, was first introduced as a bill by Femi Gbajabiamila in 2016. It was later reintroduced in 2019 and got more attention from the National Assembly in November 2022 after the eight-month strike of university workers. The bill was finally signed into law by President Bola Tinubu on Wednesday, April 3, 2024. The Act is to assist Nigerians in funding their higher education with a repayment plan of two years after the completion of the National Youth Service Corps (NYSC). The project will be funded by 1% of all profits received by the federal government, as well as 1% of taxes, levies, and duties collected by the Federal Inland Revenue Service (FIRS), Nigerian Immigration Service (NIS), and Nigerian Customs Service (NCS). Additional sources of funding will include gifts, grants, and endowment funds.

Is this initiative the best course of action that the federal government can implement to address the alarming decline of the educational system? Has the federal government conducted a thorough and comprehensive analysis of the employment rate for graduates across various fields and regions to obtain a comprehensive understanding of the current employment situation for graduates before adding the two-year repayment after the National Youth Service Corps (NYSC)? One can only wonder if this scheme prioritizes political interests over the concerns of the average university student in Nigeria and whether the Student Loan is a worthy distraction from the minimum wage war going on between the Federal Government and civil servants.

Although this program aims to offer all students the same chances to succeed, regardless of their background, and to prevent students from quitting school because of financial difficulties, the long-term disadvantages of attending school without the associated financial burden outweigh the short-term advantages.

On the part of the students, the student loan initiative is a bad debt because bad debts are those that do not offer long-term benefits or whose repayment plans outweigh your ability to pay them back. Although the loan should be considered a good debt, unfortunately, it isn’t. This is because there is no guarantee of a job, even with all the knowledge and skills a person possesses. This already weakens the hope of paying off the loan after graduation. The repayment plan of 2 years after the NYSC program also seems unrealistic because the Nigerian Graduate Report 2022 indicates that 58.9% of HND graduates, 49.55% of OND graduates, and 39.75% of bachelor’s degree holders are unemployed. If I am unable to get a job two years after NYSC and I apply to get a job and the recruiter is made aware of my loan debt, will I still be employed?

Despite the availability of student loans, there are legitimate concerns stemming from the persistent strike actions initiated by unions such as the Academic Staff Union of Universities and other related bodies. Access to improved standards of teaching, an advanced and relevant curriculum, as well as the provision of adequate infrastructure, among other critical factors, need to be prioritized in order to uphold the fundamental purpose and quality of education. These issues require immediate attention to ensure a conducive educational environment for students and educators alike.

It is very likely that the rise in tuition fees seen at certain public universities will set a precedent for other schools to do the same. This may be justified by the fact that students can now obtain loans to help cover the higher costs.

The student loan scheme is not the optimal solution to the issues facing the educational system. One major issue is that the government does not see education as an investment and does not deem it fit to properly fund this sector. A lot of federally owned institutions are poorly funded with bad infrastructure in place.

In place of student loans, the government should look into awarding scholarships to indigent students, grants, and bursaries, thereby wiping out the debt repayment loans associated with the student loan initiative. The government can do this by empowering the state and local government authorities financially to undertake this project more effectively.

The Access to Higher Education Act, 2023, is a good idea but not the optimal solution in Nigeria because of our socioeconomic climate. Scholarships, grants, and bursaries are better options that can increase accessibility to higher education. Additionally, the rate of graduate unemployment and how it can be improved and maintained should be considered when deliberating on issues as sensitive as this.