On June 12, 2023, the Student Loan Act became law. Also known as the Access to Higher Education Act, the new law was created to support the provision of interest-free student loans in Nigeria to students seeking admission into tertiary institutions. 

The legislation was first conceived in 2016 by Femi Gbajabiamila, current Chief of Staff to President Tinubu. Although it was reintroduced in 2019, the law’s real life will begin in September under the supervision of an 11-person committee. The Governor of the Central Bank will chair the committee and appoint a secretary. 

Who is eligible for student loans in Nigeria?

If you are looking to attend a higher institution in Nigeria, you are eligible for the loan. But you have to be Nigerian. This is a criterion stipulated by the Student Loan Act.

However, there are other criteria guiding eligibility. According to Section 15 of the act, candidates can be disqualified from getting student loans in Nigeria for a number of reasons. Here are a few of them:

• If the candidate or their parent has defaulted in the payment of previous loans. 
• If a candidate is found guilty of exam malpractice.
• If the candidate is a convicted felon or past drug offender.

These are perhaps commonsensical reasons for loan ineligibility. The tricky bit comes in Section 14, which seems to state that the candidate’s family income must be less than ₦500,000 per annum.

A little napkin maths using the Nigerian minimum wage (₦30,000) for a family with two working parents suggests that such a household receives ₦720,000 annually. That is already more than the law’s ₦500,000 per annum cap. 

This perhaps suggests that the law was created for families earning less than the minimum wage. But critics of the law can argue plausibly that another detail in the law runs contrary to that suggestion. 

This is because the final criterion in the section says candidates must provide at least two guarantors: a level 12 civil servant, a lawyer with at least 10 years experience, a judicial officer or a justice of the peace. In a time of vast inequality, it may prove quite difficult for a household earning less than ₦60,000 to know persons of that calibre in any meaningful way. 

But there’s more. To repay the loan, beneficiaries will part with 10% of their income or profit monthly. The clock starts ticking two years after the candidate completes the mandatory NYSC programme. Fail to pay and candidates risk imprisonment for two years, a fine of ₦500,000 ($650) or both. 

How you can apply for student loans in Nigeria

If you’re one of the rare Nigerians who can satisfy all the aforementioned conditions, you can apply for the loan by submitting the following documents, through your bank, to the chairman of the committee:

• Copy of the student’s admission letter.
• A letter by the guarantors addressed to the chairman of the committee.
• Two passport photographs from each of the guarantors, name of employer, and evidence of employment.
• 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.

These documents must be submitted alongside a cover letter signed by the head of the institution and its student affairs officer. After your application is received by the chairman, processing and disbursement of your funds will take place within 30 days. 

This disbursement, however, will depend on the availability of said funds.

Are Nigerians happy with the Student Loan Act?

Following its announcement, criticism of the law was almost immediate. But months later, the government has yet to reverse or revise its stipulations. 

On X (formerly Twitter), one user referred to the qualification criteria as outrageous and wicked. He wrote: “On this Student Loan Act, I’m concerned about three things: (i) the requirements for guarantors (ii) the consequences of being a guarantor (iii) the fact that the loan is interest-free.” 

Another user asked, “How will the student pay back the loan after graduating when there are no jobs?”

Other questions can be asked: How would a struggling family pay back this loan? Will any civil servant sign a guarantor’s form knowing he might be jailed if a candidate fails to pay the loan? Are candidates certain they’ll get jobs post-NYSC?

Can the Student Loan Act be better?

It’s unclear if critics of the law want it repealed. But it could perhaps be redrafted. A statement from a major stakeholder in the issue, Usman Barambu, President of the National Association of Nigerian Students (NANS), conveys the idea that the law can be redeemed with some adjustments.  

Barambu asserted the need for an expansion of the law. “The board only captured NUC, sidelining polytechnics and colleges of education,” he said. “They should all be included for fairness and equity.” 

He then added that the grace period should be extended from two years to four or five years. 

Another user on X offered a suggestion that could be just as useful. “Every student/parent…sitting for JAMB should be well abreast of the Student Loan,” he posted. “You can’t benefit from what you don’t know.”

It seems clear that communicating and redrafting a new version of the Student Loan Act along the lines of these recommendations might be beneficial. After all, the law is intended to provide succour for indigent Nigerians, which is an admirable plan. With some tweaking, it could actually accomplish providing beneficial student loans in Nigeria.