Put the Student before the Loan A Student Perspective on Nigeria’s Student Loan Act

Although the 2023 Student Loan Act was signed into law recently, with presumably good intentions, the provisions of the act do not reflect the reality of the intended beneficiaries—students from lower-income-earning families.

On 12 June 2023, President Bola Tinubu signed the Students Loan Bill into law. Earlier that day, I had a discussion with a friend about how the rising cost of living (due to the rising inflation and fuel subsidy removal) was leading to absenteeism from classes and postings. I was delighted at the possibility of the Students Loan Act being a healing balm for students. On closer examination, I realized that the policy which intends to help poor Nigerians to acquire tertiary education contains provisions that are far from the reality of the average poor student and represent a stark disconnect from the relief which it aims to provide.  

In a video from the 2015 presidential election campaign, President Tinubu declared that ‘we will give student loans and for our (school) programmes, four years will be four years.’ He also repeated this during the build-up to the 2023 Presidential election. To be fair to him, he effectively signed the bill within the first two weeks of his administration. Shortly after the bill was signed into law, the Ministry of Education announced that the Federal Government ‘can no longer foot the bills for universities,’ a move representing the beginning of the end of tertiary educational subsidies in the country. 


One of the earliest introductions of the concept of a national student loan scheme as we know it today emerged in Colombia in 1951 and it is still in operation. In 1958, the United States government passed the National Defense Education Act (NDEA), which provided low-interest loans for students in fields like sciences, engineering, and teaching. The NDEA loan programme evolved to become the Federal Direct loan programme, which allowed students to borrow directly from the US Department of Education. However, in America, the US loan system has been widely criticized as ‘evil’ and ‘horrible over the years due to prolonged struggles to repay the loans. As of January 2021, around 45 million Americans were in student loan debt with the total loan debt amount valued at around $1.8 trillion. According to a study conducted by  Research.com, today, the average university-educated American spends about 10-30 years post-graduation paying student loans. This has led to the emigration of young Americans to Europe in search of cheap tuition. 

On the African continent, the student loan scheme was introduced in Ghana in 1971 but was abolished the following year as a result of a change in government following the January 1972 coup d’état, which ousted the democratically elected government of Dr Kofi Busia. Nigeria also launched its student loan scheme in 1972 with Decree No. 25 of General Yakubu Gowon’s regime establishing the students’ loan board. The board provided loans amounting to N46 million between 1973 and 1991 but had various challenges, especially regarding the recovery of loans with over N40 million still yet to be repaid as of today. This led to the promulgation of a new decree, Decree No. 12 1988, which aimed to decentralize the process of awarding and recovering loans through the creation of regional offices. The students’ loan board was replaced by the National Education Bank (EDUBANK) following the promulgation of Decree 50 of 1993. Like many other projects that have been announced over the years in Nigeria, the EDUBANK project did not see the light of the day.  


The 2022 Student Loan Act was sponsored by Hon. Femi Gbajabiamila, the immediate past speaker of the House of Representatives and the current chief of staff to the president. According to official documents, it aims to ‘provide easy access to higher education for indigent Nigerians through interest-free loans from the Nigerian Education Loan Fund established through the act’. (See more details on the Student Loan Act here).   

The eligibility conditions for students applying for the loans include a family income of less than N500,000 per annum, proof of admission into any of the public tertiary institutions in the country, and provision of at least two guarantors. According to the Act, each guarantor shall ‘be a civil servant of at least level 12, a lawyer with at least ten years of post-call experience, a judicial officer, or a justice of peace.’ A student can be disqualified from applying for the loan if they have been convicted of a felony or offences relating to fraud or drug or if the student/their parents are proven to have defaulted in respect to any previous loan from an organization or the government. 


The Student Loan Act provides access to education for more students through interest-free loans and financial flexibility it offers. Despite this, one major flaw of the act is that it does not reflect the reality of the average Nigerian. Ironically, most of the eligibility conditions disqualify the target population, poor Nigerians, from accessing the loan. First, the combined annual family income requirement of less than N500,000 means that only students from families earning less than N42,000 monthly can apply. Assuming a two-parent household and that both parents earn some form of income, each parent must earn less than N21,000 monthly for their children to qualify. This requirement sounds paradoxical in a country where the minimum wage is N30,000—this implies that many families are technically not eligible to apply for the student loan. 

In addition, the need to provide two guarantors represents a disconnection between the target audience and the nature of the guarantors required. Low-income-earning households with less than N500,000 annual income are less likely to have a strong enough relationship with guarantors who can put their careers on the line for them to access the loan. The probability of a lawyer with ten years post-call experience or a civil servant of the director cadre serving as guarantors for a poor student is, therefore, low. Moreover, this requirement could encourage guarantors to demand hefty fees from poor students, fuelling cash-for-guarantor rackets.  

We also need to consider a major challenge: the presence of student loans could motivate school administrators to charge higher fees (convinced that students can borrow to pay) without making any significant improvements to the quality of education. Tertiary institutions in Nigeria are beleaguered by various problems, including poor academic research output, lack of a feedback system between lecturers and students, and egocentric lecturers who create various barriers for their students. It is not uncommon to hear Nigerian lecturers confidently announcing to their students that ‘A is for God, B is for me, and C is for the top two students that will really impress me.’ The introduction of student loans without a complete overhaul of the educational system will only ensure the sustenance of the bare minimum educational standards which are available currently. Also, there is a high probability of students who can’t afford the current tuition fees dropping out of school because of the dilemma of inaccessible loans and increased school fees. 

Furthermore, the student loan covers tuition fees only, neglecting accommodation and other expenses incurred daily by the students. I am currently a student at one of the relatively affordable federal universities, Obafemi Awolowo University (OAU), which is home to many indigent students. From my observations, indigent students have a major problem paying for feeding, printing materials, transportation, and others. This has led to many of them resorting to menial jobs to survive, reducing the time devoted to academic purposes. If the student loan provides for living expenses, it could be a major support for them.  


Ahead of introducing student loans, a more proactive approach should be the implementation of policies addressing the bad state of tertiary institutions across Nigeria. The Nigerian education system needs a complete overhaul. Sadly, the government has neglected this issue. Within the first two weeks of President Tinubu’s administration, Nigerians have had to grapple with the effects of increased fuel prices. To cushion the effects of economic hardship, the government should channel funds that would have otherwise been spent on the subsidies into sectors like education and other vital social services. 

We also need to re-evaluate the eligibility conditions regarding the student loan act’s required annual family income. The implementation of student loans could lead to increased tuition fees, with many families unable to afford these fees and their children unable to access the loans due to the narrow eligibility criteria. An upward review of the eligible annual family income from N500 thousand can help cushion the effects of increased tuition fees 

The major expenses incurred by students include those related to living and admin expenses. One of my friends at OAU, for instance, currently spends about N1,000 daily on transport due to the fuel subsidy removal and inflation. In just December last year, this amount was around N500 daily. With feeding and other expenses, his expenses could easily cost over N60,000 monthly. For many students, high expenses are driving absenteeism from classes and other academic activities. The scope of student loans should be widened to provide for living expenses, thereby ensuring more robust coverage of student expenses.  

Although student loans have a long history around the world, such programmes are not without flaws. In Nigeria’s case, there are also several other student-related issues the government could have prioritized instead. (As of 2022, for instance, Nigeria has about 90 million unemployed graduates.) Hopefully, the government will see the loopholes within the new act and put the horse before the cart instead of the other way around

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