• Monday, April 22, 2024
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What you need to know about the Student Loan Bill passed today

Student loan: NELFUND targets 1.2m beneficiaries in first pay-out

The Nigerian Senate has passed the Student Loan (Access to Higher Education) Act (Repeal and Re-Enactment) Bill, 2024.

President Tinubu had on June 12, 2023, signed the Student Loan Bill into law to enable Nigerian students to access loans at interest-free rates. However, the President last week wrote to lawmakers seeking a re-enactment of the Bill to remove some conditions that could affect its sustainable implementation.

The upper legislative chamber passed the Bill for a third reading after considering the report of the Senate committee on tertiary institutions and the Tertiary Education Trust Fund (TETFund).

The executive bill is entitled “A Bill for an Act to repeal the Students Loans (Access to Higher Education) Act, 2023 and Enact the Student Loans (Access to Higher Education) Bill, 2004 to Establish the Nigerian Education Loan Fund (NELFUND) as a body corporate to receive, manage and invest funds to provide loans to Nigerians for higher education, vocational training and skills acquisition and related matters,” and will replace the current Act when signed into law by President Bola Tinubu.

President Tinubu had on June 12, 2023, signed the Student Loan Bill into law to enable Nigerian students to access loans at interest-free rates. However, the President last week wrote to lawmakers seeking a re-enactment of the Bill to remove some conditions that could affect its sustainable implementation.

The student loan scheme was scheduled to take off last week Thursday, but the presidency, dashing the hopes of many Nigerians announced its postponement before the date.

During the debate on the Bill sponsored by Bamidele Opeyemi, the Senate leader, Adetokunbo Abiru, Senator representing Lagos East, stated that one of the main reasons the Loan Scheme was postponed was to enable a reenactment of the law.

It is therefore expected that the Bill will receive expeditious assent from the President and kick off as hoped.

What you need to know about the Bill

The Bill seeks to enhance the implementation of the Higher Education Student Loan Scheme by addressing challenges related to the management structure of the Nigerian Education Loan Fund, applicant eligibility requirements, loan purpose, funding sources and disbursement and repayment procedures.

Under the proposed Bill, NELFUND is established as a body corporate that can sue and be sued in its name and has the power to acquire, hold, and dispose of movable and immovable property
for the purpose of its functions.

The Bill empowers the Fund to provide loans to qualified Nigerians for tuition, fees, charges and upkeep during their studies in approved tertiary education institutions and vocational and skills acquisition institutions in Nigeria.

This is in contrast to the 2023 Act which placed the administration of the Fund in a Special Committee, which will be chaired by the Governor of the Central Bank of Nigeria.

The Bill also removed the eligibility criteria in the existing law which puts annual income of the applicant or family of the applicant at less than N500,000.
The 2023 Act also required that applicants provide two guarantors who shall be a civil servant of level 12 and above, a lawyer with ten years post-call experience, a judicial officer, or a justice of the peace.

But in the proposed Bill, every student of tertiary institutions established by the federal or state governments, and vocational institutions approved by the government is eligible to apply and criteria will be set by the fund.

Under the 2023 Act, students can only apply for loans to pay tuition fees, despite other institutional charges students pay or for their upkeep. But in the new Bill, applicants to the Fund may apply for loans to cover tuition and other fees payable to the school and maintenance allowance payable to the student.

The subsisting Act also disqualified the children of parents who have defaulted on any loans previously from applying for the student loans; but, under the new Bill, Student applicants can no longer be disqualified based on their parent’s loan history.

Furthermore, the Bill provides that the Fund shall not initiate loan recovery efforts until two years after the completion of the National Youth Service programme. A beneficiary may request an extension of enforcement action by the Fund by providing an affidavit indicating that he is not employed in any capacity and is not receiving any income.

In addition, the 2023 Act criminalises failure to repay loans obtained from the Fund without consideration for circumstances, including unemployment, death, or disability. However, the proposed legislation provides that only a person who provides a false statement to the Fund is guilty of a felony and is liable to imprisonment for three years.

It also provides for loan forgiveness in the event of death or acts of God causing inability to repay.