Important Facts to Know About Nigeria’s New Student Loan ACT

On Democracy Day, June 12, 2023, President Bola Ahmed Tinubu signed into law a groundbreaking student loan bill aimed at providing interest-free loans to Nigerian students pursuing higher education. The legislation seeks to address the challenges of limited access to education and insufficient funding in the country. This article aims to provide comprehensive information about the benefits, eligibility criteria, application process, loan terms, and repayment methods associated with this student loan program.

Benefits of the loan for Nigerian Students:
The implementation of the student loan law is set to bring about several advantages for Nigerian students:

1. Enhanced Accessibility: The Act aims to expand access to education by providing financial support to students from all backgrounds, regardless of their financial means.
2. Affordable Tuition: With the establishment of the education bank, students pursuing higher education can afford tuition fees, even as schools may introduce more cost-reflective fee structures.
3. Interest-Free Loans: Beneficiaries of the student loan program will only be required to repay the principal amount they borrowed, without any additional interest charges.

Eligibility Criteria:
To be eligible for the student loan, Nigerian students must meet the following requirements:

1. Admission: Students must have secured admission into a Nigerian government-owned university, polytechnic, college of education, or vocational school.
2. Income Limit: The income of the student or their family must be less than N500,000 per annum.
3. Guarantors: Applicants must provide at least two guarantors, who can be civil servants of level 12 or above, lawyers with a minimum of ten years post-call experience, judicial officers, or justices of peace.

Ineligibility for Loan Access: Important Factors to Consider
When applying for a student loan, it’s crucial for student applicants to be aware of the circumstances that may disqualify them from accessing the loan. Take note of the following key points:

1. Previous Loan Default: If students have a proven history of defaulting on any previous loan granted by any organization, they will be disqualified from accessing the loan.
2. Exam Malpractice: Students found guilty of exam malpractice by any school authority will be ineligible to receive the loan.
3. Conviction of Felony or Offenses of Dishonesty or Fraud: If students have been convicted of a felony or any offense involving dishonesty or fraud, they will not be eligible for the loan.
4. Drug Offenses: Students who have been convicted of drug offenses are disqualified from accessing the loan.
5. Parental Loan Default: If any of the students’ parents have defaulted on a student loan or any other loan granted to them, the student will be disqualified from receiving the loan.

Loan Approval and Application Process:
The application process for the student loan involves the following steps:

1. Submission: Applicants must submit their applications through their respective banks to the Chairman of the Committee established under the Act. The application should include necessary documents such as the student’s admission letter and a cover letter signed by the head of the institution.
2. Review and Communication: The Committee is responsible for reviewing the applications and communicating the application status to the applicants within 14 days of receipt.
3. Timely Processing: The processing and disbursement of loans should be completed within 30 days of the application reaching the Chairman of the Committee, ensuring efficient and prompt processing.

Loan Repayment:
The repayment of the student loan follows these guidelines:

1. Commencement: Loan repayment starts two years after the completion of the National Youth Service Corps (NYSC) program.
2. Deductions: Repayment is facilitated through direct deductions of 10% of the beneficiary’s salary by the employer. Self-employed individuals must remit 10% of their total monthly profit.
3. Default Consequences: Failure to repay the loan or involvement in aiding default is considered an offense. Conviction may result in a fine of N500,000, imprisonment for two years, or both.

   The implementation of the student loan law in Nigeria is a significant step toward improving access to higher education for Nigerian students.