Education Loan for Students by President Tinubu (2) -By Afe Babalola

Last week, I examined the provisions of the 1993 Education Bank Law and how the bank folded up due mainly to the failure of the government to set up the governing board for the bank contrary to the express provisions of the law setting up the bank.

This week, I intend to examine the Government White Paper on the recommendations of the Ministerial Committee and other factors that contributed to the demise of the bank.

It was found that a total of 225 members of staff who were on the payroll of the bank were civil servants who failed to follow the civil service rule. Most of them were appointed, transferred, seconded or promoted as members of staff of the bank. Some of them were not promoted for a long time. It was also found that a total of 49 members of the staff were current pensioners and six were classified as pensioners outside unified pension scheme.

The board was found to have approved the transfer of N75million capital grant from the loans fund for investment in a mortgage finance house which was in distress to the detriment of the primary objectives of the bank law.

It was also found that the bank area offices tampered with recovered loans. As at 10th October, 2001 the bank had no additional records of loans balances in the CBN and commercial banks.

It is clear from the above that as has been the case with virtually anything Nigerian, the “Nigerian factor” was brought to bear on the Education Bank.

However, despite the identified flaws in the operation of the bank, and the resultant decision of the government to wind it up, I still remain of the firm conviction that there is a need for a student loan bank.

I am also of the view that the problems faced by the 1993 Education Bank should guide the new Education Loan Law approved by Tinubu government.

This new law on Students’ Loan is headed Students Loans (Access to Higher Education) Act, 2023. It contains explanatory memorandum which states as follows: “This act provides easy access to higher education for Nigerians through students’ loan with a view to providing education for all Nigerians”.

The Students Loans (Access to Higher Education) Act, 2023 is said to be: “ABill for anAct to repeal the Nigerian Education Bank Act Cap. N104, Laws of the Federation of Nigeria, 2004 and enact the Students Loans (Access to Higher Education) Act, 2023 to provide easy access to higher education for indigent Nigerians through interest free loans from the Nigerian Education Loan Fund established in this Act with a view to providing education for all Nigerians; and for related matters”.

Section 2 of the Law provides as follow:

“Subject to the provisions of any other enactment, all students seeking higher education in any public institution of higher learning in Nigeria shall have equal right to access the loans under this Act without any discrimination arising from gender, religion, tribe, position or disability of any kind”.

However, Section 14 restricts access to the Loan to Students who have secured admission into Nigerian universities, polytechnics, college of education or any vocational school established by the federal government or the government of any state of the federation.

In other words, students in private university are excluded from obtaining loans for education under this law. For avoidance of doubt, paragraph 14(a) of the law provides as follows:

14(a) applicant must have secured admission into any of the Nigerian universities polytechnics, colleges of education or any vocational school established by the Federal Government or the Government of any state of the Federation.

I am of the firm view that Students Loan should be available to all students to pay for university tuition, books and living expenses. It is to me discriminatory and unjust to exclude students in private higher institutions from benefiting from the loan.

Experiences in other climes

In Australia, for instance, tertiary education is usually funded through the HECS-HELP scheme which is in the form of loans that are not normal debts and are paid over time via a supplementary tax, using a sliding scale based on taxable income.

The import of this scheme is that loan repayments are only made when the students have graduated and have income to support the repayments. The debt does not attract normal interest.

In the United Kingdom, students’ loans are primarily provided by the state-owned Students’ Loan Company. But unlike what obtains in Australia, interest begins to accumulate on each loan as soon as the student receives it, but repayment is not required until the start of the next tax year after the student either completes or abandons his education.

Since 1998 for example, repayment has been collected by HMRC via the tax system and are calculated based on the borrower’s current level of income. If the borrower’s income is below a certain threshold 15,000 British Pound Sterling per tax year for 2011/2012, 21,000 British Pound Sterling per tax year for 2012/2013, no repayments are required, though interest continues to accumulate.

In the United States of America, there are two types of students’ loans: federal loans sponsored by the federal government and private loans which broadly includes state-affiliated non-profit institutional loans provided by schools. Interest does not accrue on subsidized loans while the students are still in school. Students’ loans may be offered as part of a total financial aid package that may also include grants, scholarships and/or work study opportunities.

The Korean experience is not substantially different from what has been discussed above. For instance, Korea’s students’ loans are managed by the Korea Students Aid Foundation, KOSAF, an institution committed to talent cultivation in charge of student aid and established in May 2009.

It is instructive to note that Korea has an ingrained philosophy that the country’s future depends on talent development and so no student is permitted to quit studying due to financial reasons as a result of which Korea makes deliberate efforts to help students grow into talents that serve the nation and society as members of the Korean society.

Through the management of Korea’s national scholarship programmes, students’ loan and talent development programmes, KOSAF offers customized students’ aid services and students’ loan programme.

It is a painful truism that our economy has not been as healthy as expected. It is therefore no small wonder that Nigeria has not been able to commit 26% of its resources to education as recommended by UNESCO. As a matter of fact, more of the country’s resources have been committed to defence because of the prevailing insecurity in the country as a result of which education is unduly suffering an underserved under-funding.

There is endemic and grinding poverty all over the country and this is largely because the government spends a lot on other areas and particularly as Nigeria depends on oil as its sole source of income. For example, there are no industries and so there are no opportunities for employment and it is industries that employ most students coming out of universities and not government.

But then, it must be appreciated that quality education requires good schools, good and well equipped laboratories, good equipment, highly qualified and committed teachers to pave way for proper education that can only come to the fore where talents are expeditiously harnessed.

It is apposite to say that government should be able to provide these facilities even if students have to pay school fees to ensure a proper maintenance of these facilities. Consequently, government needs to adopt a school fee-paying system backed up with loan system which would enable students to pay fees.