In keeping with his campaign promise, the president of the Federal Republic of Nigeria, Bola Ahmed Tinubu, on Monday, June 12 signed into law, the Student Loan Act.
The Student Loan Act is a landmark piece of legislation that will make it easier for Nigerian students to access higher education. The act establishes the Nigerian Education Loan Fund, which will provide interest-free loans to students who meet certain eligibility requirements. This is a major step forward for Nigerian education, as it will help to level the playing field for students from all backgrounds.
In this post, we will take a closer look at the Student Loan Act and what it means for Nigerian students. We will discuss the eligibility requirements, the terms of the loans, and the repayment process.
What you need to know about the Student Loan Act
How will it be funded?
The Nigerian Education Loan Fund will be financed by a 1% contribution from the revenue of the Nigeria Customs Service (NCS), Nigeria Immigration Service (NIS), Federal Inland Revenue Service (FIRS), and 1% of profits on oil and mineral. It will be managed by the Central Bank of Nigeria (CBN) and disbursed through Deposit Money Banks or Commercial Banks.
Who is qualified for the loan?
According to the Act, to qualify for the loan, your family income must be less than N500,000 per year. You also need two guarantors: a civil servant with 12 or more years in the service and a lawyer who is at least 10 years post-call.
● Which educational institutions does it cover?
Currently, the loans cover Universities, Polytechnics, Colleges of Education, and Vocational Schools established by the federal government and state governments. This effectively excludes private universities.
The Act further specifies that the loans only cover tuition fees and require direct payment to the universities. It does not cover accommodation and living expenses.
How are students to repay the loan?
Repayment of the loan, as specified in this Act, begins two years after the completion of the National Youth Service Corps program. The repayment process requires the employer to deduct 10% directly from the beneficiary's salary and credit it to the Fund.
If there is a change of job, the beneficiary must inform the Chairman of the Committee within 30 days of starting employment with the new employer, providing all relevant details about the new job.
For self-employed individuals, they must remit 10% of their monthly total profit to the Fund. Additionally, self-employed individuals must submit essential information such as business name, address, registration documents (if applicable), bank details, partner names, and names of directors and shareholders to the Committee within 60 days of becoming self-employed.
How to apply
Applicants are to submit their applications to the Chairman of the Fund Committee.
Each application shall be accompanied by.
- A cover letter signed by the Vice Chancellor, Rector or the head of the institution and the Students Affairs Officer of the institution.
- A copy of the student’s admission letter.
- A letter by the guarantors addressed to the Chairman of the Committee established under this Act recommending the student for the loan and stating that he accepts liability in the event of default.
Applicants must also submit the following.
- Two passport photographs from each of the guarantors.
- Name of guarantors’ employer.
- Evidence of being so employed by the named organisation or
- Particulars of the guarantor’s business registration with the Corporate Affairs Commission or any other appropriate authority and his bankers, where the guarantor is self-employed.
The committee will communicate to the applicant on the status of his application within 14 days of the receipt of any application. If the committee approves the application, processing and disbursement of the loan will be made within 30 days of the applicant reaching the bank.
Grounds for disqualification
A student is disqualified from accessing the loan if.
- They are proven to have defaulted in respect of any previous loan granted by any organisation.
- Been found guilty of exam malpractice by any school authority;
- Have been convicted of a felony or any offence involving dishonesty or fraud.
- have been convicted of drug offences; or
- Any of the parents have defaulted in respect of student's loan or any loan granted to the person.
Consequences for defaulters
While the Student Loan Act does not specifically address the situation of Nigerians who remain unemployed two years after completing the National Youth Service Corps (NYSC), it does establish a two-year prison sentence for individuals who fail to repay their loans.
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